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Grain Prices Ease as First Ship Leaves Ukraine Port Under UN Deal

Published 08/01/2022, 06:53 AM
Updated 08/01/2022, 08:08 AM
© Reuters.

By Geoffrey Smith 

Investing.com -- Grain prices eased on Monday after a ship left a Ukrainian port with a cargo of corn for the first time since a UN-brokered deal came into force last month.

The Sierra Leone-flagged Razoni left the port of Odesa carrying 26,000 tons of corn destined for the Lebanese port of Tripoli. Under the terms of the deal, it will have to stop for inspection in Turkish waters before proceeding to its final destination. 

The developments raise hopes that a looming food crisis in many parts of the emerging world - which are dependent on Ukraine and Russia for much of their grain supply and consequently for their overall food security - can be avoided. Ukraine has been largely unable to export vast stocks of wheat, corn, sunflower seeds, and oil, among other produce, due to the Russian blockade on its ports since February. Black Sea agricultural commodities analyst Andrey Sizov quoted Ukrainian President Volodymyr Zelensky's office as saying that 15 other ships were waiting to leave Odesa as of Monday.

 A small volume of Ukrainian grain has reportedly made its way to world markets after being stolen by Russian forces occupying ports in eastern Ukraine.

Ukraine and Russia accounted for over a quarter of world wheat exports last year, and while countries such as Egypt have been able to compensate for a shortfall this year by buying from other countries such as France, they have done so at much higher prices, putting pressure on their balance of payments. 

Under the terms of the deal, Russia has agreed not to target ports or ships as they are loading, unloading, approaching, or departing. However, doubts about whether the deal would hold had been raised when Russian missiles struck Odesa within days of the deal being signed. 

Russian officials first denied the strike, then claimed that they had only been targeting a military target. 

US Wheat Futures, which have fallen nearly 40% from their peak in May as the initial shock to world food markets has receded, fell another 2.6% as of 08:10 AM ET (1210 GMT), while US Corn Futures fell 2.7%.

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