ACC ALPINE GROUP

Ships loaded with crops are sailing from Ukraine, as the United Nations and Turkey work to salvage the agreement to keep seaborne exports flowing even after Russia’s weekend announcement that it was suspending its involvement in the deal.

Wheat prices soared on Monday, with traders pointing to uncertainty about the outlook even as the vessels departed, while tensions surged in Ukraine as Russia launched a massive wave of missile attacks across the country. Ukraine is one of the world’s biggest suppliers of wheat, corn and vegetable oil and the July agreement to open three Black Sea ports has been vital to help alleviate a global food crisis.

Russia’s announcement that it would indefinitely suspend involvement in the safe-passage agreement, which was brokered by Turkey and the UN, drew widespread condemnation from Ukraine and its allies, with US President Joe Biden warning it would increase starvation. 

However, the UN announced late Sunday it had held discussions with all the parties to the deal, and agreed with Turkey and Ukraine to have vessels carrying food continue departing from Ukraine on Monday. Inspections at the Istanbul coordination center will continue for both inward- and outward-bound ships, and there are also new vessels scheduled to arrive at Ukrainian ports. Russian delegates were informed, the UN said. 

The ships are moving under the basis that Russia has only temporarily suspended its participation in implementing the deal, but is still a signatory to the agreement, Ismini Palla, a UN spokeswoman for the Black Sea Grain Initiative, said by phone at about 7 a.m. London time. Under the terms of the initiative, all parties agreed not to undertake attacks against merchant and civilian ships. 

Wheat in Chicago earlier jumped as much as 7.7% to $8.9325 a bushel at the open on Monday. Corn climbed as much as 2.8% and soybean oil rose 3%. 

Crop traders have been focused for weeks on the approaching deadline of Nov. 19 for renewing the grain-corridor agreement, particularly as senior Russian officials repeatedly criticized the deal, suggesting that any extension would require difficult negotiations. Exports have also been slowed by a swelling backlog of vessels waiting to be inspected as part of the agreement - Ukrainian President Volodymyr Zelenskiy said some ships had been waiting for three weeks. 

The grain-corridor deal faced hurdles and skepticism from the start, as insurers and vessel owners weighed the risks of sending cargoes through the Black Sea as the war raged on. 

While Ukraine has shipped more than 9 million tons of goods since the corridor opened, there is still lots left to go. Silos were already overflowing with last year’s crops when seaborne exports resumed and farmers are now reaping a new harvest, while planting wheat and barley that will be collected next year. 

Russia suspended its participation in the deal on Saturday after drone strikes against its naval fleet, claiming without evidence that one of the drones might have come from a grain ship that’s part of the Black Sea initiative. Ukraine strongly denied the accusations.