Wheat prices fall as Ukraine sends first shipment of grain since Russian invasion in a deal aimed at easing global food prices

Cargo ship Razoni left for Lebanon carrying more than 26,000 tons of corn, reports said Monday. It marked first grain ship to leave the port of Odessa since February 24, Oleksandr Kubrakov, Ukraine’s Minister of Infrastructure, said on Twitter with a video showing the ship departing with its horn blowing.

Wheat prices have largely been moving lower since the United Nations, Turkey and Ukraine reached an agreement on July 22 to reopen three ports in Ukraine whose grain has been waiting to be shipped. September wheat futures on Monday fell 2.4% to $788.50 a bushel on the Chicago Board of Trade.

Black Sea wheat prices in Asia dropped last week in the wake of the shipment deal, according to Hellenic Shipping News, which said prices were quoted below $400 a tonne, including cost and freight, down from $415 a tonne a couple of weeks ago.

The United Nations said last week the deal will enable the safe transportation of commercial foodstuffs and fertilizer from three of Ukraine’s Black Sea ports: Odessa, Chornomorsk and Yuzhny. Another 16 ships are awaiting departure from Ukraine, the Financial Times reported.

The “ripple effects of the war in Ukraine” along with the COVID-19 pandemic and climate shocks are contributing to driving up prices for food, fuel and fertilizer, the World Food Programme said in a report released in June.

The FAO Food Price Index from the United Nations averaged 154.2 points in June, up by 23% from the year-ago period, although June’s reading marked a third-consecutive monthly decline. International prices dairy and meat had increased while those of vegetable oils, cereals and sugar had decreased.

Ukraine is among the world’s largest agricultural producers and exporters, according to the US Department of Agriculture. The country was the fourth-largest corn exporter in the 2021/2022 marketing year, accounting for 12% of global exports. It was the fifth-largest wheat producer worldwide and the largest exporter of sunflower oil.

The shipments deal “will help to effectively respond to and prevent rising global food insecurity,” UN Deputy Spokesperson Farhan Haq said last week.

The Associated Press on Monday reported that Kubrakov said the shipments would also help Ukraine’s economy that’s been devastated by the war. “Unlocking ports will provide at least $1 billion in foreign exchange revenue to the economy and an opportunity for the agricultural sector to plan for next year,” Kubrakov said.