Ukraine, Russia likely to sign deal to resume Ukraine's grains exports, Turkey says

Ukraine and Russia are likely to sign a deal July 22 to resume Ukraine's grains exports from the Black Sea, the Turkish President's office said.

Turkey said the deal is to be signed in Istanbul by Ukraine, Russia, Turkey and the UN Secretary General.

The UN and Turkey have been working for two months to broker a deal between Ukraine and Russia amid concerns of global food price spikes.

If realized, it could lift some pressure off the global wheat supply chain as buyers continue to face record prices amid worsening food inflation.

Combined #wheat output of four major producers-#EU, #Ukraine, #Australia, #India- is forecast to see a 9% decline. What does this mean for global #foodsecurity? Watch this video:#OATT#inflation#Foodinflation#grainspic.twitter.com/neRnAsCT2N

— Commodity Insights Agriculture (@SPGCIAg) July 14, 2022

Ukraine is a major supplier of wheat and corn globally. The country's grains exports stalled from the Black Sea after Russia's military invasion Feb. 24.

Ukraine accounted for nearly 10% of global wheat exports and 12% of the world's corn exports in marketing year 2021-22 (July-June), according to data from the US Department of Agriculture.

The fall in exports from Ukraine had led to soaring grains prices globally and a food crisis in many countries.

Expectations of a deal to resume exports from Ukraine have weighed on wheat export prices.

Platts assessed Ukraine's 11.5% protein wheat FOB prices at $363/mt on July 21, down $5.50/mt day on day, according to data from S&P Global Commodity Insights.

Prices of wheat on the Chicago Board of Trade have also declined. The September wheat futures contract on CBOT was at $7.865/bu, down 19.75 cents day on day.

Trade impact

Ukraine's wheat exports are seen declining year on year due to the war. According to market participants, the war has adversely impacted farm and trade logistics.

So far in MY 2022-23, Ukraine has exported 119,000 mt wheat, down 52% on the year. In MY 2021-22, Ukraine exported slightly more than 18 million mt of wheat, according to its agriculture ministry.

The Ukrainian Grain Association has projected the country's wheat exports at 10 million mt in MY 2022-23 because of logistical constraints.

The USDA in its July World Agricultural Supply and Demand Estimates report July 12 has also forecast Ukraine's wheat exports in MY 2022-23 at 10 million mt.

Platts Analytics expects Ukraine to sell 10 million-12 million mt wheat in MY 2022-23.

Ukraine's wheat output is also in focus. The Ukrainian Grain Association has pegged Ukraine's wheat production for MY 2022-23 at 20.8 million mt, 37% below the year-ago level.

Ukraine harvested 33 million mt wheat in MY 2021-22, according to data from its agriculture ministry.

The USDA pegged Ukraine's wheat harvest at 19.5 million mt in MY 2022-23. Platts Analytics sees Ukraine's wheat production in MY 2022-23 at 20 million-22 million mt.

The deal may lead to a higher-than-expected wheat exports from Ukraine in the current marketing year.