Grain prices fall as Ukraine and Russia sign UN-backed deal to restart grain exports

In a move to avert a potential global food crisis, Ukraine and Russia on Friday signed a UN-backed deal that will allow the release of millions of tonnes of grain from Black Sea ports.

As part of Russia’s war against Ukraine, the essential food item has been blocked from being exported around Europe and the rest of the world. Ukraine is a major grain producer, the ninth biggest in the world, and a major exporter of the product. It also plays a critical role in supplying oilseeds and grains to the global market.

A signing ceremony took place on Friday afternoon at Dolmabahçe Palace in Istanbul and was attended by the UN secretary general, António Guterres, and Recep Tayyip Erdoğan, Turkey’s president, who is reported to have played a critical role in negotiations.

In response, the international price of wheat has come down to €331.75 per tonne, dipping by 5.42 per cent.

Speaking at the signing, UN Sec Gen Guterres said that the deal would pave the way for a large volume of food exports from Ukraine to those countries on the brink of bankruptcy , while it is hoped grain and other essential goods such as sunflower oil from three key Ukrainian ports will be granted secure passage.

Another crucial area the agreement touches upon is the ensuring of safe passage for Russian-made fertiliser products. Such products are viewed as an essential part of ensuring high yields on crops, which would also serve to help control the rapid increase in food prices since the war began.

How will the deal work?

According to international media, a coalition of Turkish, Ukrainian and UN staff will observe and monitor the loading of grain onto vessels in Ukrainian ports, before navigating pre-planned routes.

Additionally, Ukrainian pilot vessels will guide commercial units transporting grain to aid in navigating the private sector through mined areas around the coastline using a map of safe channels provided by the Ukrainian side of the conflict.

After crossing the Black Sea, the vessels will head towards Turkey’s Bosphorus strait, while being closely monitored by a joint operation in Istanbul, consisting of representatives from the UN, Ukraine, Russia and Turkey.

The same operation will inspect ships entering Ukraine to ensure no weapons or harmful goods are being brought into the region.

Crucially, both Ukraine and Russia have agreed not to attack any of the commercial vessels or ports transporting vital grain.

The deal between two warring nations was described as “unprecedented” by the UN secretary general, who commented that it will serve to aid in the stabilisation of food prices, “which were already at record levels even before the war”.