The termination of the Black Sea Grain Initiative will not have negative consequences in the short term, while Europe is harvesting its own crops, but later the interest of importing countries in Russian wheat could increase, French media reported on Tuesday
PARIS (Pakistan Point News / Sputnik - 18th July, 2023) The termination of the Black Sea Grain Initiative will not have negative consequences in the short term, while Europe is harvesting its own crops, but later the interest of importing countries in Russian wheat could increase, French media reported on Tuesday.
On Monday, the Black Sea Grain Initiative, which provided for a humanitarian corridor to allow exports of Ukrainian grain over the past year, expired as Russia did not extend its participation. Moscow has been repeatedly critical of the fact that the deal's provisions pertaining to Russia had not been fulfilled.
The experts say that there is enough wheat on the market for now, but in the medium term, Russia's withdrawal from the grain deal will encourage importing countries to replace Ukrainian grain with Russian, French newspaper Le Monde reported.
The major part of all the grain exported globally comes from Russia, which has an average of 12.5 million tonnes in reserves, and it is the cheapest grain in the world, the report said. Therefore, Russia could easily replace Ukraine on the market, although that could potentially increase the importing countries' dependence on Moscow, the newspaper said.
The production of grain has almost halved in Ukraine within the last two years, Le Monde reported, adding that, according to preliminary estimates, 25 million tonnes of corn and 17.5 million tonnes of wheat will be produced in Ukraine in 2023-2024 compared with 42 and 33 million tonnes in 2021-2022, respectively. This season, Ukraine is expected to export 6 and 10 million tonnes of wheat and corn less than in the last one, so the situation on the market will be less tense, the report said.
Stock exchanges reacted calmly to the reports about Russia's withdrawal from the grain deal, Le Monde noted. At the Euronext stock exchange, futures prices for wheat for September supplies grew only by 1%. However, the newspaper predicted that the termination of the deal would inevitably lead to tensions and inflation in the medium term.
