The Black Sea Grain Initiative is set to expire next month, and USDA’s Chief Economist Seth Meyer told USDA’s annual Ag Outlook Forum that he’s concerned about what happens next. Meyer; “You’ve got two of the biggest wheat producers in the world fighting in an area that exports a lot of wheat.”
With Ukraine’s grain exports expected to fall almost one-third after one year of war, even with the Black Sea Grain Initiative.
Meyer; “That initiative is coming up here in the next month for renewal. That is something that contributes to the Ukrainians exporting grain. That moderates global grain prices. Its availability in the world market reduces wheat prices, and it reduces other commodity prices.”
And it also helps in reducing hunger and starvation in parts of Africa, the Middle East, and Asia. Ukraine wants the July 2022 deal with Russia (extended once and set to expire March 18) continued another year. Meyer; “My concern would be if the Black Sea Grain Initiative does not continue, they will have to rationalize production further down. The Black Sea Grain Initiative is serving a very important purpose to get that product out and moderate global grain prices.”
Still, Meyer says the Grain Initiative does not get Ukraine back to pre-war production levels of 86 million tons in 2021, cut to 54 million tons last year in the face of war and financial and export problems.