As concerns of a global food crisis heighten, Ukraine was granted access on Monday to ship its first container of grain, carrying 26,000 metric tons of corn from the port of Odessa to Tripoli, Lebanon, according to the Wall Street Journal.
The deal states that Ukrainian and Russian ships carrying grain will not be attacked, nor will the three ports mentioned in the agreement.
What Happened: Last Friday, Russia and Ukraine agreed to resume exports of millions of tons of Ukrainian grain across the Black Sea, a deal that was brokered by the United Nations and Turkey.
United Nations Chief Secretary-General António Guterres mentioned that the deal was, “A beacon of hope – a beacon of possibility – a beacon of relief -- in a world that needs it more than ever.” He added that this will bring relief to countries facing bankruptcy and famine.
Guterres also noted that besides Ukraine grain, Russian fertilizers and foods are also essential to stabilizing spiraling food prices and shortages.
According to the UN Food and Agriculture Organization (FAO), Ukraine is among the world’s leading grain exporters, supplying more than 45 million tons annually to the global market.
Due to the backlog of grain, it will take months to clear out the stored corn, wheat and barley, as the U.S. Department of Agriculture is projecting Ukraine to export 30.6 million metric tons of grain and seeds in 2022 through 2023, nearly half the tonnage of the prior season.
Safety Precautions: NBC News reported that the Sierra Leone-flagged cargo ship Razoni will move along safe corridors where it will be inspected on Tuesday in Istanbul, by officials from Turkey, Russia and the United Nations.
Due to Russia’s attacks on the Ukrainian agriculture infrastructure, senior Ukrainian officials expressed doubts on the safety of their ships and ports as Russian missiles struck the port of Odessa on July 23, hours after the agreement was signed.
Outlook: On Monday, wheat futures have fallen 2% and corn futures have dropped by 3%.
If Russia decides not to abide by the agreement, certain wheat stocks could have more potential upside heading into the winter months with a dwindling supply, as Ukraine expects the war to deplete its harvest.
For instance, Bunge Limited BG, The Andersons Inc ANDE, and CME Group Inc CME could all benefit from further supply and price issues in the agriculture industry.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.