Shipment courier

Food prices will rise as Russia halts Ukrainian grain shipments

Russia’s backtracking last weekend on a UN-brokered deal to export Black Sea grain is likely to affect shipments to import-dependent countries, deepen a crisis world food and cause price increases.

Hundreds of thousands of tons of wheat earmarked for delivery to Africa and the Middle East are at risk following Russia’s withdrawal, while Ukrainian maize exports to Europe will be curtailed, two Singapore-based traders said.

Russia on Saturday suspended its participation in the UN grain deal for an “indefinite period” after what it called a Ukrainian drone attack on its Black Sea Fleet in Crimea.

“If I have to replace a ship that was supposed to come from Ukraine, what are the options? Not much really,” said a Singapore-based grain trader who supplies wheat to buyers in Asia and the Middle East.

Chicago wheat futures jumped more than 5% on Monday and corn rose more than 2% on supply fears.

Earlier this year, global wheat prices hit a record high and maize hit a 10-year high as Russia’s invasion of Ukraine fueled a recovery triggered by adverse weather and disruptions procurement related to COVID-19.

Traders said Australia, a key supplier of wheat to Asia, was unlikely to be able to fill a supply gap, with shipping slots reserved until February.

Shares of Australian company Graincorp (GNC.AX) rose fivefold in first-half profits due to supply constraints resulting from the Russian-Ukrainian conflict rose more than 7%.

No ship crossed the maritime humanitarian corridor established on Sunday.

The United Nations, Turkey and Ukraine, however, continued to implement the Black Sea Grains deal and agreed a transit plan for Monday so that 16 ships could move forward despite the withdrawal of Russia.

“We have to see how the situation develops. It is unclear whether Ukraine will continue to ship grain and what will happen to Russian exports,” the Singapore-based grain trader said.