Grain Prices Jump as Russia Backs Out of Ukraine Deal

Oct. 31, 2022

Russia is withdrawing from a deal that has allowed grain to be exported through Ukrainian ports on the Black Sea, driving up grain prices and threatening developing nations in the region with food insecurity.

Pan Demetrakakes

Russia, Ukraine and Turkey had reached an agreement, brokered through the United Nations, to allow cargo ships to leave Black Sea ports. Ukraine is a major exporter of grain and other commodities, and almost all of those shipments go through the Black Sea.

The deal, reached in July, allowed Ukrainian food shipments to reach nearly prewar levels. But Russia announced on Oct. 29 that it was suspending the agreement.

Russia’s pretext was that Ukraine had attacked ships in the protected corridor. However, the backtracking was widely seen as part of Russia’s escalation after a successful Ukrainian counteroffensive that has retaken a considerable amount of Russian-occupied territory. Such measures have included stepped-up Russian bombardment of Ukrainian civilian infrastructure and a shutoff of natural gas shipments to Western Europe. American and other officials are accusing the Kremlin of “weaponizing food.”

Russia’s action is preventing more than 200 ships from leaving Black Sea ports. Wheat futures rose 5.5% on Monday morning, the first day of trading after Russia’s announcement.

Observers warned that disruption of Ukrainian’s wheat exports could have dire consequences for poor nations that Ukraine historically has supplied. “As Somalia teeters on the brink of a catastrophic famine, a further disruption of critical grain exports could push Somalia over the edge by impacting affordability and availability of grain within the region,” an official of the nonprofit International Rescue Committee told CNN.

About the Author

Pan Demetrakakes | Senior Editor

Pan has written about the food and beverage industry for more than 25 years. His areas of coverage have included formulations, processing, packaging, marketing and retailing. Pan worked for Food Processing Magazine for six years in the 1990s, where he was operations editor (his current role), touring dozens of food plants of every description. He has also worked for Packaging and Food & Beverage Packaging magazines, the latter as chief editor, during which he won three ASBPE awards. He is a graduate of Stanford University with a BA in communications.