Black Sea Grain Deal Failure: How Food Prices Can Affect You

The withdrawal of Russia from a black sea grain deal from Ukraine caused a spike in the price of wheat and corn on the world commodities markets on Monday.

Millions of people could go hungry if the accord collapses due to an increase in food prices for consumers worldwide.

The pact, according to the White House, was “critical” to bringing down global food costs, which skyrocketed following Russia’s invasion of Ukraine in February of last year.

Adam Hodge, a spokesman for the US National Security Council, stated in a statement that Russia’s decision to discontinue participation in the Black Sea Grain Initiative “will worsen food insecurity and harm millions of vulnerable people around the world.”

As traders anticipated a shortage of the staple crops, wheat futures on the Chicago Board of Trade increased 2.7% to $6.80 per bushel and corn futures rose 0.94% to $5.11 per bushel.

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Black Sea Agreement Secures Grain Shipments from Ukraine

Later in the day, the contracts gave up those gains. Following Russia’s full-scale invasion of Ukraine in March 2022, wheat prices are still down 54% from their all-time high, while corn prices are down 37% from their 10-year peak in April 2022.

Ships bringing grain out of Ukrainian ports can travel safely thanks to the Black Sea agreement, which was first negotiated by Turkey and the UN a year ago. Monday at 5:00 p.m. ET, the arrangement was supposed to end.

According to UN data, the agreement has so far permitted the export of close to 33 million metric tons of food through Ukrainian ports.

The agreement had been extended three times, but Russia has threatened to end it frequently, claiming that exporting its own goods has been hindered.

According to the United Nations, it is also by far the largest exporter of sunflower oil, making up 46% of global exports.

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