UN Secretary General Says Black Sea Grain Deal Extended

A deal aimed at easing global food shortages by facilitating Ukraine's agricultural exports from its southern Black Sea ports was extended for 120 days on Thursday.

The agreement, initially reached in July, created a protected sea transit corridor and was designed to alleviate global food shortages by allowing exports to resume from three ports in Ukraine, a major producer of grains and oilseeds.

"I welcome the agreement by all parties to continue the Black Sea grain initiative to facilitate the safe navigation of export of grain, foodstuffs and fertilisers from Ukraine," UN Secretary General Antonio Guterres said in a statement on Thursday.

Guterres said the UN was also "fully committed to removing the remaining obstacles to exporting food and fertilisers from the Russian Federation" - a part of the deal Moscow sees as critical.

The export of Russian ammonia via a pipeline to the Black Sea has not yet been agreed as part of the renewal, a source familiar with discussions told Reuters.

"The renewal of the Black Sea grain initiative is good news for global food security and for the developing world," Rebeca Grynspan, secretary-general of the U.N. Conference on Trade and Development said on Twitter, calling it a "beacon of hope".

"Solving the fertilizer crunch must come next," she added.

The 120 day extension was less than the one-year sought by both the United Nations and Ukraine.

GLOBAL FOOD PRICE CRISIS

A drop in shipments from Ukraine following Russia's invasion in February has played a role in this year's global food price crisis but there have also been other important drivers including the COVID-19 pandemic and continued climate shocks such as droughts in both Argentina and the United States.

Since July, some 11.1 million tonnes of agricultural products have been shipped under the grain deal, including 4.5 million tonnes of corn and 3.2 million tonnes of wheat.

Wheat prices on the Chicago Board of Trade fell following the news that the agreement would be extended with the benchmark contract down 2.75% at $7.95 a bushel while corn prices fell 1.3% to $6.60-1/2 a bushel.

"This is bearish for the market because it removes remaining doubts and we have something clear for the coming four months," one French trader said.

"However, the fact that it is only for four months instead of the one year Ukraine had been asking for means that uncertainty will resume in four months, with people wondering whether Russia will sign an extension or not."