Wheat prices have jumped after Russia pulled out of the Black Sea grain deal.

Wheat prices have jumped after Russia pulled out of the Black Sea grain deal.

The threat of a renewed spike in global food inflation emerged on Monday after President Vladimir V. Putin pulled Russia out of the Black Sea grain accord, lifting wheat prices and hurting vulnerable countries in Africa and especially the global South. A new possibility was encountered. era of food insecurity.

Chicago wheat futures, a barometer for global prices, jumped more than 4 percent as the Kremlin’s move once again threatened global markets’ key trade route for grain from Ukraine, one of the world’s key bread baskets. There is one.

Timothy Ash, a senior sovereign strategist at Bluebay Asset Management in London and a Russia expert, said the move appeared to be part of a broader effort by Mr. Ukraine. “This will hurt specific countries that depend on these exports,” Mr Aish said. But beyond that, “it shows just how vulnerable Putin is after the Wagner coup: he is now desperate to take advantage of anything.”

The Black Sea Grain Initiative was launched a year ago to ease a global food crisis following Russia’s invasion of Ukraine, when Russia blocked ships carrying the country’s grain from its ports on the Black Sea. Those blockades quickly drove grain prices to record highs.

Since the agreement, food prices have declined by more than 23 percent from their peak in March 2022, according to the United Nations Food and Agriculture Organization’s Food Price Index. The agreement has allowed the export of more than 35 million tonnes of vital food commodities from Ukrainian ports on the Black Sea to 45 countries on three continents. United Nations Said.

With Black Sea ports closed again, Ukraine may have to double down on alternative routes to get grain out, including exporting via the Danube River and overland by truck and train – such trips Which takes a lot longer than placing the items on the ships.

Few factors could prevent food prices from rising to the staggering levels seen immediately after Russia invaded Ukraine. For one thing, the global commodity price outlook is weaker than a year ago due to a faltering economic recovery in China, while the global cost-of-living crisis — exacerbated partly by rising food and fuel costs in the wake of Russia’s aggression Is. Demand is generally going down, Mr Aish said.

Supply chain tensions are also easing, and manufacturing and production costs have gone down, according to an analysis by Oxford Economics. Still, the think tank said, while food prices are trending down, they are likely to remain high compared to pre-war levels.

Arlan Suderman, chief commodities economist at financial services firm StoneX, said that as far as the global food supply is concerned, Russia is still dumping cheap wheat on the market “so we are not running out of wheat right now.”

A day before Mr Putin pulled out of the grain deal, he sent a separate warning to Europe by signing a surprise order to temporarily freeze the Russian operations of two major European companies.

France-based global dairy producer Danone said in a statement Its Russian assets were placed under temporary administration by the Russian authorities, and it was “investigating the situation”. The company said it is “preparing to take all necessary measures to protect its rights as a shareholder of Danone Russia and for the continuity of business operations in the interest of all stakeholders, in particular its employees.”

The world’s third largest beer maker, Danish brewing company Carlsberg said this found out on sunday that its Baltika breweries in Russia were transferred to the temporary management of the Russian Federal Agency for State Property Management. Carlsberg announced more than a year ago that it was pulling out of Russia. Last month it said it would invest $40 million at its Ukraine factories, and it had found a buyer for the Russian operation, which employs 8,400 workers.

“Following the president’s order, the prospects of this sale process are now highly uncertain,” Carlsberg said in a statement on Sunday.

Patricia Cohen Contributed reporting.

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