Russia announced on Monday, July 17, the suspension of the agreement on the export of Ukrainian cereals. Kremlin spokesman Dmitry Peskov announced without further details that the agreement, which has allowed the export of 33 million tons of grain since July 2022, would be operational again “when the part on the Black Sea concerning Russia will be implemented”. This suspension should have little immediate impact, at a time when the northern hemisphere is harvesting, but will inevitably create tensions and inflation in the medium term.

The situation is very different from that of the end of February 2022, when Russia invaded Ukraine, with the effect of closing the Black Sea to navigation, Ukraine’s main agricultural export route. This country was then the first world exporter of sunflower oil and the fourth for wheat and corn.

The opening of the corridor on August 1, 2022 provided relief to importing countries, particularly in the Mediterranean and Africa, driving down world prices which had reached unprecedented levels in May.

In two years, Ukraine has seen its cereal production almost halve, with forecasts of 25 million tonnes of corn and 17.5 million tonnes of wheat for 2023-2024, against 42 million tonnes of corn and 33 million tonnes of wheat in 2021-2022, according to the latest report from the US Department of Agriculture. “In 2023-2024, it should export 6 million tonnes of wheat and 10 million tonnes of corn less, compared to the previous campaign”, notes Gautier Le Molgat, analyst at Agritel.

The situation is therefore less tense, because there are fewer products to export and because the northern hemisphere is in the middle of the harvest period. “The future needs will become clearer at the end of the harvest. It was a calm period on the markets, which incidentally reacted very little to the suspension of the agreement, “the price of wheat increasing by less than 1% on Euronext, specifies Gautier Le Molgat.

In addition, in recent months, “we observed a bottleneck in the Bosphorus, with very slow traffic”, in particular due to a lower number of Russian inspections of ships using the corridor, notes Edward de Saint- Denis, broker at Busty

Even before the opening of the corridor, the European Union set up solidarity lanes, land and river corridors, intended to facilitate Ukrainian exports across Europe. The Farm Foundation, a think tank on global agricultural issues, estimates that currently half of Ukrainian exports go through these channels, particularly through Poland and Romania. “One of the questions that arises is whether the EU, which has recovered 50% of the Ukrainian cereal supply since the start of the conflict, has the capacity to re-export these volumes”, notes Olia Tayeb Cherif, head of studies for Farm.

The EU would like to improve the land offer, in particular with a project to harmonize the rail gauge (rail gauge) at the borders between the European Union and Ukraine, but this will take time. “We can increase the pace a little, but we will not solve the problem for the volumes involved,” said Edward de Saint-Denis.

At present, the world does not lack wheat. But, recalls Damien Vercambre, of the firm Inter-Courtage, “the bulk of exportable wheat is in Russia, with around 12.5 million tonnes of stocks, and it is the cheapest wheat in the world”.

Russia could fill at least part of the Ukrainian shortfall, as could the EU, with a harvest that looks very good. But this would accelerate the dependence of third countries on Moscow and would be difficult to manage in the event of a major climatic accident.

You have to differentiate between corn and wheat. China, which is by far the main beneficiary of the maritime corridor for corn, will be able to turn to Brazil, which is currently selling at a lower price and whose harvest has been record.

The situation is more complex for wheat. If the volumes exist, requesting countries can be supplied, but at what cost? “A lasting closure of the corridor will have an impact on food inflation, which will affect food security,” warns Olia Tayeb Cherif, from Farm. Already, States, such as Egypt recently, are struggling to honor payments for certain calls for tenders.

Moreover, food aid itself could be weakened, since “Ukraine is a supplier to the World Food Programme: around 8% of the volumes of Ukrainian wheat exported went to the WFP, destined for countries such as Yemen, Afghanistan and the Horn of Africa,” she points out.