Grain prices showed a downward trend following the extension of the Black Sea Grains Initiative, but there are still uncertainties beyond the 60-day period. There is a renewed risk of volatility in the grain market due to fears of export restrictions from Russia. Although the extension has been welcomed, the explicit statement by Russia that the deal would be terminated in 60 days’ time if a number of demands were not met still adds a degree of uncertainty to the markets. Moscow insists that its future position will be shaped by progress in the normalization of its exports through the lifting of a series of sanctions, including restrictions on access to the international banking system, the facilitation of logistics and the re-opening of a key ammonia pipeline. Among the Russian demands are the restoration of access to the SWIFT financial messaging system for Russian state-owned Rosselkhozbank, a resumption of farm machinery supplies, and the unblocking of foreign assets and accounts held by Russian agricultural companies.

The world’s food supply is less fragile than many feared at the beginning of the war in Ukraine, but it is still worrying. Publishing its first full set of projections for 2023/24 world supply (production plus opening stocks), the International Grains Council forecast to edge higher on year to year for grains (2,283 m t.) but, with an assumed uplift in demand, carryover inventories are forecast to tighten again. Particularly on wheat, another large global wheat harvest is expected in 2023/24. Based on projections for a modest pullback in harvested area and, with productivity seen retreating from the prior year’s record, total output is tentatively forecast at 787m t (-2%), about 2% more than average. Cumulative production in the eight major exporters is seen 14m t lower y/y, at 387m t.