Australian farmers warned to brace for grain price volatility as they wait for news in Ukraine grain export

Australian farmers have been warned to brace for grain price volatility with a landmark deal to resume Ukraine’s grain exports — which could send global grain prices downwards — left hanging in the balance this week after Russia attacked a key port. Russian missiles hit Ukraine’s strategically important southern city of Odesa on Saturday, threatening a landmark deal signed hours earlier to allow the safe passage in and out of Black Sea ports and ease global food shortages caused by the war. Ukranian president Volodymr Zelensky called the strike “barbarism” and proved Moscow could not be trusted to implement the deal, warning grain exports would not restart if the airstrike was a sign of things to come. Under the grain-shipment agreement, both Kyiv and Moscow agreed not to target vessels and port facilities involved in the initiative, including the ports of Odesa, Chernomorsk and Yuzhny. The deal was seen a breakthrough after nearly five months of war and crucial to curbing soaring global food prices by allowing grain exports to be shipped from Black Sea ports, including Odesa. It is hoped more than $14 billion worth of grain exports — about 5mt per month — will be able to be shipped, with the blockage of Ukranian ports by Russia’s Black Sea fleet trapping millions of tonnes of grain and sending global grain prices soaring. The Ukrainian military said the attack involved four cruise missiles, two of which were shot down by Ukrainian air defences, but did not hit the port’s grian storage area or cause significant damage. “In the context of what is currently happening with Ukrainian grain, the strike was carried out exactly where the grain is,” Yuriy Ignat, a spokesman for the Ukranian air force, said. Friday’s export deal is hoped to avoid famine among tens of millions of people in poorer nations by providing more wheat, sunflower oil, fertiliser and other products into world markets, including for humanitarian needs, at somewhat lower prices. Ukraine reportedly has about 22mt of grain — including wheat, maize, sunflower seed and other grains — sitting in silos after exports stopped in February. A blockade of Ukrainian ports by Russia’s Black Sea fleet, trapping tens of millions of tonnes of grain and stranding many ships, has worsened global supply chain bottlenecks and, along with Western sanctions, stoked food and energy price inflation. Rabobank grains and oilseeds agricultural analyst Denis Voznesenski told media this week prices had declined during the past few weeks as the agreement came to fruition, but that agreement was “now in jeopardy”. He said global grain prices would continue to be volatile based on the outcome of the agreement. “Eastern Ukraine is an active warzone… Russia (potentially) wanted this to get easier or cheaper freight insurance, to make the world a little more comfortable to buy from Russia,” he said. “Even if this deal theoretically works for a week… what is stopping Russia from setting a missile in a month? “We are in a situation where the Northern Hemisphere is harvesting, and whenever there is new crop coming online, prices tend to dampen. “Leading into the deal, prices fell substantially… a month ago, wheat was US100c per bushel, and now it is about 780c per bushel… the market is trying to adjust to see what this all means.” Meanwhile, Russian farmers are reporting high wheat yields as harvest gets underway with the potential for a near-record harvest and the exporting of 130mt of grain in 2022. Russia’s Foreign Minister Sergei Lavrov this week dismissed claims Moscow had caused the global food crisis, saying Western nations were distorting the truth about the impact of sanctions on global food security. Moscow has denied responsibility for the crisis, blaming instead sanctions for slowing its own food and fertiliser exports and Ukraine for mining the approaches to its Black Sea ports. In a speech to Arab League ambassadors in Cairo, he said Western nations were distorting the truth about the impact of sanctions on global food security. He accused Western nations of trying to impose their dominance over others. Much of the Arab world and Africa is badly affected by grain shortages caused by Russia’s war in Ukraine. Mr Lavrov was visiting four African nations — Egypt, Uganda, Ethiopia and Congo — this week to rally support amid anger over the war. Egypt, one of the world’s top wheat importers, bought 80 per cent of its wheat from Russia and Ukraine last year, and has been torn between ties to Moscow and its close relationship to the West. A UN official said a separate pact signed on Friday would smooth such Russian exports and that the United Nations welcomed US and European Union clarifications that their sanctions would not apply to their shipment. Senior UN officials said the deal was expected to be fully operational in a few weeks and would restore grain shipments from the three reopened ports to pre-war levels of five million tonnes a month. The strikes on Odesa were condemned by the UN, the European Union, the US, Britain, Germany and Italy.