What will the 60-day grain deal extension give Russian exporters?

On March 18, Turkish President Recep Tayyip Erdogan announced the extension of the grain deal. This was done thanks to the negotiations that took place with the two parties, Erdogan was quoted by the Turkish daily Haberturk.

The extension of the agreement was confirmed by the UN. At the same time, both sources did not name the terms of the extension. The Ukrainian side says that the agreement has been extended by 120 days, as before. But Russian officials insist they only agreed to a 60-day extension. According to RIA Novosti, the representatives of the UN and Turkey did not name a deadline for the extension of the grain agreement in principle.

Russia demanded to connect the Rosselkhozbank to the SWIFT payment system, resume deliveries of agricultural machinery and remove other obstacles to the export of Russian food

Russia’s Permanent Representative to the UN Vasily Nebenzya sent a letter to the UN confirming that the grain deal had been extended by exactly 60 days. This letter was posted on Twitter by his first deputy, Dmitry Polyansky. The letter says that Russia is ready to consider the question of prolonging the agreement after May 18, but only if a number of conditions are met. Therefore, the Russian side demands to reconnect Rosselkhozbank to the SWIFT international payment system, to resume the supply of agricultural machinery and spare parts to Russia, to remove insurance and port access restrictions against Russian ships and cargo, to restore the supply of ammonia through the Togliatti-Odessa Pipeline, unlock accounts and enable financial activities for Russian mineral fertilizer producers.

For Russian companies, the extension of the grain agreement in the form in which it was previously implemented does not matter. The increasing pace of shipments of Russian grains and other products abroad is the credit of Russian exporters, said Anatoly Tikhonov, director of RANEPA’s Center for International Agribusiness and Food Security. At the same time, the world market is the first to suffer from the shortage of Russian grain deliveries. Russia accounts for about 20% of all world wheat exports. While Ukraine mainly supplies corn and feed grains, which are used to feed livestock. Also, wheat production in the Ukraine has dropped significantly this season, while Russia has received a record crop. And the shortage of Russian mineral fertilizers in 2023 will cause a reduction in the harvest in many countries around the world, the UN said.

The Union of Grain Exporters has repeatedly pointed out that problems with settlements, freight and insurance persist, only that the business has adapted to the new conditions. At the same time, Russia is trying to achieve the implementation of the second part of the grain agreement (on the removal of barriers to the export of Russian food and mineral fertilizers) from the very beginning. So last fall, according to Reuters, Russia turned to Western countries with a proposal to lift sanctions against Rosselkhozbank, allowing it to re-establish ties with correspondent banks to process grain export payments. This would speed up the liquidation of export contracts, which would stimulate the turnover of goods and the pace of shipment, Eduard Zernin, president of the board of directors of the Union of Grain Exporters, told RG.

In agricultural machinery, imports account for about 40%, most of it was supplied from hostile countries until spring 2022. But after the start of the NWO, well-known Western companies stopped deliveries of agricultural machinery and spare parts to Russia. To replace this import, it will not take one or two years, market participants noted.

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