LONDON (Reuters) – Russia has halted its participation in the Black Sea grain export deal, the Kremlin said on Monday.
The deal, brokered by the United Nations and Turkey a year ago, aimed to alleviate a global food crisis by allowing Ukrainian grain shipments blocked by the Russia-Ukraine conflict to be safely exported.
Wheat futures rose sharply following the news, with the Chicago Board of Trade’s most active wheat contract up almost 3% after earlier rising over 4%.
PETER KISLER, EM PORTFOLIO MANAGER, TRIUM CAPITAL, LONDON:
“I think that it’s a pause rather that a complete breakdown.”
“They will ultimately find a deal but I think Russia is a bit upset with Turkey at the moment (after Turkey released some Ukraine PoWs).”
HASNAIN MALIK, HEAD OF EQUITY RESEARCH, TELLIMER RESEARCH, UAE:
“Suspension of the Black Sea deal is not unexpected and may bring to an end the recent softening of commodity grain prices. That’s bad news for smaller and poorer importers in emerging markets such as Egypt.”
STUART COLE, CHIEF MACRO ECONOMIST, EQUITI CAPITAL, UK:
“Potentially it moves us back to a shortage of global grain supplies and rising prices. And it is interesting that Russia is pulling out of the deal just before the next harvest begins, which removes a large chunk of global supply.”
“Potentially it starts to push global inflationary pressures higher again and may make central banks think twice about easing back on their hawkish stances.”
PIOTR MATYS, SENIOR FX ANALYST, IN TOUCH CAPITAL MARKETS, POLAND:
“Inflation has peaked across Europe, but it may not decelerate as quickly as anticipated if food prices start rising sharply after Russia decided not to extend the grain deal with Ukraine.”
TIM ASH, BLUEBAY ASSET MANAGEMENT, UK
“(Russian President Vladimir) Putin kicks Erdogan in the teeth, and the whole of the global south with it.”
“Just to restate, Putin is responsible for the global cost of living crisis, thru his attack on Ukraine. He shows by pulling the grain deal that he does not care who he hurts.”
(Reporting by the global markets team and Bangalore bureau; Editing by Hugh Lawson)
