Russian Grain Union Says Terminating Grain Deal Right Decision, Will Increase Wheat Prices

Russia's suspending its participation in the grain deal is the right decision as it will increase Russian wheat prices, the president of the Russian Grain Union (RGU), Arkadiy Zlochevskiy, told Sputnik on Monday

MOSCOW (UrduPoint News / Sputnik - 17th July, 2023) Russia's suspending its participation in the grain deal is the right decision as it will increase Russian wheat prices, the president of the Russian Grain Union (RGU), Arkadiy Zlochevskiy, told Sputnik on Monday.

Earlier in the day, Kremlin spokesman Dmitry Peskov said that the grain deal agreement, also known as the Black Sea Grain Initiative, had de facto been terminated, however Russia would immediately return to its implementation as soon as the commitments toward Moscow, such as on exports of Russian foodstuffs, are fulfilled. After Peskov's statements, September wheat futures rose by 3.4% on the Chicago Stock Exchange, according to the bidding data.

"This is the right decision, it (the deal) should not have been concluded at all. It (the termination of the deal) is not a bad thing for us, on the contrary," Zlochevskiy said.

With the deal, Russia bore losses, he added, noting that the agreement led to a noticeable price discount on Russian wheat supplies compared to competitors' prices. This difference ranged from $10-20 per tonne of wheat, but at its peaks reached up to $70 per tonne, the RGU president said.

"Prices will not return to fair levels immediately, but objectively, grounds for this discount are at least shrinking," Zlochevskiy said, noting that Russia's refusal to participate in the deal does not affect the direction of Russian grain exports.

Amid the Russian military operation in Ukraine, Moscow, Kiev, Ankara and the United Nations struck a deal to provide a humanitarian maritime corridor for ships with food and fertilizer exports from the Ukrainian Black Sea ports on July 22, 2022. Moscow has since agreed to several extensions to the deal, which expires on July 17. The agreement was made as part of a package deal, the second part of which, the three-year Russia-UN memorandum, provides, among other things, for the unblocking of Russian agricultural exports, and the re-connection of the Russian Agricultural Bank to the SWIFT payment system. Moscow has said this part of the package agreement has not yet been implemented.