Global grain prices rally due to Russia’s refusal to renew Black Sea Grain deal

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The global grain prices have rallied after Russia’s refusal to renew the Black Sea Grain Deal. The increase has also triggered a jump in local grain prices.

Experts say this may undermine the gains for emerging markets of stabilising grain prices through the deal.

The majority of grain from the Black Sea was primarily exported to Europe, The Middle East and North Africa.

But the availability of grain and the decline in prices indirectly benefited the global community, including South Africa.

Russia is one of South Africa’s wheat supplier accounting for an average share of 26% yearly; and experts say South Africa is not directly at risk as it has large domestic grain suppliers.

But any price increase on the international market is likely to affect the prices of grain in South Africa.

Agricultural Economist at FNB, Paul Makube says, “We are impacted by developments on the international markets so any increase will have an impact on the domestic market. This is coming at a time when international food prices have been on a negative territory and inflation has been on the low side.”

Economic impact

Experts say the decision by Russia could impact consumers if no solution is found in the near future and that the extent of this will depend on how global grain markets react to this current glitch caused by Russia.

The prices of commodities that are produced through grain such as maize, bread and sunflower oil are also expected to go up as a result of this.

South Africa’s input costs are also expected to be affected by this.

But is not all doom and gloom. South Africa’s maize harvest is at 16.35 million tonnes making it the second largest harvest on record.

This means South Africa will have over 3 million tonnes of maize for exports in the 2023 to 2024 financial year.

Meanwhile, the The United Nations Secretary-General has expressed his deep regret at a decision by Russia to terminate the Black Sea Grain Initiative.

More details in the report below: