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Global food supplies are at risk as Russia withdraws from the Black Sea agreement

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SINGAPORE — Russia’s withdrawal from a U.N.-brokered Black Sea grain export deal over the weekend could affect supplies to import-dependent countries, deepening the global food crisis and sending prices soaring.

Hundreds of thousands of tonnes of wheat booked for delivery to Africa and the Middle East are at risk following Russia’s withdrawal, while Ukraine’s corn exports to Europe will take a hit, two Singaporean traders said.

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Russia on Saturday suspended its participation in the UN grain agreement “indefinitely” after what it said was a major Ukrainian drone attack on its Black Sea fleet in Crimea.

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“If I need to replace a vessel that was supposed to come from Ukraine, what are the options? Not much actually,” said one Singaporean grain trader who supplies wheat to buyers in Asia and the Middle East.

Global wheat prices jumped to an all-time high earlier this year and corn hit a 10-year high as Russia’s invasion of Ukraine fueled a rally fueled by adverse weather and COVID-19 supply disruptions.

Australia, a key supplier of wheat to Asia, is unlikely to be able to fill any supply shortfall as delivery slots are booked well into February, traders said.

On Sunday, no ships moved along the created maritime humanitarian corridor. The United Nations, Turkey and Ukraine, however, insisted on the Black Sea grain deal and agreed on a transit plan on Monday for 16 vessels to move forward despite Russia’s withdrawal.

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“We need to see how the situation will unfold. It is unclear whether Ukraine will continue to supply grain and what will happen to Russian exports,” said a Singaporean grain trader.

Chicago wheat futures jumped more than 5% on Monday, while corn futures jumped more than 2%.

Asian buyers that have recently booked Ukrainian wheat cargoes include Indonesia, the world’s second-largest importer of the grain, although the region typically relies on Australia and North America.

In the latest deals, Indonesian millers bought four cargoes, or about 200,000 tonnes, of Ukrainian wheat for shipment in November, traders said.

Last week, a government agency in Pakistan bought about 385,000 tons of wheat in a tender that is likely to come from Russia and Ukraine.

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“We are not sure whether Russia will continue to export wheat or whether it will be safe for ships carrying Russian wheat to depart from the Black Sea, even if Ukrainian exports remain blocked,” said a second Singaporean trader of an international company.

Under the UN-brokered grain agreement, the Joint Coordination Center (JCC), made up of officials from the UN, Turkey, Russia and Ukraine, coordinates ship movements and inspects vessels. Since July, more than 9.5 million tons of corn, wheat, sunflower products, barley, rapeseed and soybeans have been exported from the Black Sea. (Reporting by Navin Takral; Editing by Tom Hogg)

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