Until the end, an agreement was uncertain. And to the end the confusion will have remained in a form of nervous war. On Saturday, March 18, Turkey, then the UN and Russia confirmed an extension of the agreement on the export of grains to the Black Sea.
Signed in July 2022 by Ukraine, Russia and Turkey, with the help of the UN, it alleviated the global food crisis caused by the Russian invasion of Ukraine by allowing the export of nearly 25 million tons of corn, wheat and other grains. According to the terms, the agreement would be “automatically renewed for the same period (120 days) unless either party notifies the other of its intention to terminate or modify it”. It had therefore already been extended by 120 days in November, until Saturday, March 18, 23:59 Istanbul time (21:59 French time).
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It was during a televised speech in the afternoon that Turkish President Recep Tayyip Erdogan first announced the extension. But he was careful not to specify the duration. In the aftermath, Ukraine’s Infrastructure Minister Oleksandr Kubrakov rushed to respond through a post on the social network Twitter, highlighting that it has been extended “120 days. We thank Antonio Guterres, the United Nations, President Recep Tayyip Erdogan, (Turkish Defense Minister) Hulusi Akar and all our partners for confirming this agreement.” , he tweeted. But a few minutes later, the Russian Foreign Ministry spokesperson reworded: “We repeated that several times […] the Russian side had informed all interested parties that the agreement was extended for 60 days. » As early as March 13, Russia, dissatisfied with the application of a second agreement to facilitate its own fertilizer exports, had indeed indicated that it would only accept a two-month extension. Even though Turkey, where the joint coordination center of the agreement that regulates the control of ships is located, indicated on Friday that it still hoped for a 120-day extension.
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A 2023 harvest that does not look favorable
60 days or 120 days, what impact for the markets? “Boats don’t just commute between two portsexplains Western France Arnaud Petit, Executive Director of the International Grains Council (IGC). For example, a boat leaving Odessa goes to Egypt, then takes something else and then maybe goes to Morocco, and so on. To schedule boats to enter the Black Sea, visibility of more than 60 days is generally required. Otherwise, companies and trading companies will find it too risky. » Otherwise, the solution may be to call on local companies, usually with smaller boats. “That means volumes come out slower and with huge financial risk as insurance companies will be much more reluctant to insure these commodities. »
In any case, the extension of the agreement was an important point. “The Black Sea accounts for about 30% of the world’s wheat trade supply. Replacement is not possible. » Without a deal, a market shock was to be expected, as Ukraine’s wheat would not be able to go out. Arnaud Petit also reminds us that it is “a risk to all boat movements on the Black Sea. The corridor agreement is in fact a kind of “peace deal” so that there is no problem, no attack on the area. » In addition to Russian and Ukrainian grain, part of the wheat produced in Ukraine or Russia is sent to Turkey to make flour. This is then generally exported back to the Middle East. These countries and North Africa would have been directly affected, with consequences for basic food products.
Especially since 2023 doesn’t look good. “We had a good harvest in 2022, with about 10 million tons more than in 2021. According to our initial forecasts, we will be less than 13 million tons for the 2023 harvest. » Unless the weather conditions are good, there is a risk that the situation will become tense from this autumn. “Without visibility in the corridor, it could create a very big hole in the markets. »