Ok, folks, the news on Reuters this morning is that the Kremlin is halting the Black Sea grain deal, brokered by the United Nations and Turkey to combat a global food crisis.
Now, one has to appreciate that the major contributor to the slowing global agricultural commodities prices (food prices) is the Black Sea Grain Deal, which allowed for a safe grain movement from Ukraine and Russia since July 2022.
Russia’s refusal to renew the Black Sea Grain Deal presents an upside risk to global grain prices, which may undermine the gains we were all starting to enjoy from the slowing grain prices, specifically in the major importing regions.
While the majority of grain from the Black Sea was primarily exported to Europe, the Middle East, and North Africa, the availability of grain and the decline in prices indirectly benefited the global community.
Regarding my home country, South Africa, we are not directly at risk as we have large domestic grain supplies. With that said, we still import about 1,5 million tonnes of wheat annually, but most of this for the 2022/23 season is already on our shores.
Still, the price reaction to the news of Russia’s refusal is worth monitoring and could impact South African consumers. But the extent of that will depend on how global grain markets react to this current glitch caused by Russia.
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