Even if parties refuse to renew the grain agreement, supplies from Russia and Ukraine are likely to keep moving. This expectation rests on a backdrop of continuing drops in global grain prices, a trend noted by market experts as domestic and international market forces shift. Dmitry Rylko, director general of the Institute for Agricultural Market Research (IKAR), explained to Rossiyskaya Gazeta that such price movement reflects deeper dynamics in the world grain market rather than a single policy outcome.
Across global markets, grain values have been trending downward since late last year. In April 2023, the price of wheat slipped by another 2.3%, marking a level not seen since mid-2021. Analysts point to ample export offers from major producers, including Russia and Australia, as a primary factor behind the softening prices. This oversupply environment tends to dampen prices even when geopolitical tensions complicate supply chains.
Rylko emphasized that the market’s expectation of price declines persists regardless of the future status of the grain deal. He noted that both Russian and Ukrainian food supplies would continue circulating in response to global demand and the flexible logistics that producers have developed over time. This resilience in supply chains helps stabilize food availability for large importing regions, offering reassurance even when political agreements face hurdles.
In May, analysts from the National Bank of Ukraine presented an inflation report underscoring potential macroeconomic risks tied to the grain agreement. They quantified an estimated loss of about $290 million per month if the grain deal were terminated. The report also cautioned that restricting exports further in Eastern Europe could add another roughly $270 million in monthly losses for Ukraine. These projections highlight how intertwined grain markets are with national economies, currency stability, and regional trading relationships. [Source: IKAR via Rossiyskaya Gazeta, inflation analysis from the National Bank of Ukraine]