Cargill is optimistic landmark Ukrainian grain-export deal will be renewed

Cargill Inc., the world’s top agricultural commodities trader, said rising grain exports from Ukraine are sparking optimism that a deal to keep ships sailing via the Black Sea will be renewed.

The increase in Ukraine’s shipments of corn, wheat and barley is helping push down world food costs after they jumped to a record in 2022, giving Cargill Chairman David MacLennan confidence that last year’s landmark UN-brokered export pact — which is up renewal March 18 — will remain in force.

The Black Sea has become a major breadbasket for the world, with Ukraine exporting about 10% of the world’s corn and 7% of its wheat. That’s made the former Soviet Union nation key supplier to some of the world’s biggest buyers, including China and Egypt.

“There is political support from around the world to keep the corridor open,” MacLennan said in an interview at Cargill’s headquarters in Minnesota last week. “As long as that is the case, we will continue to help farmers and help product out of the country.”

In a separate interview from Cargill’s trading floor, Michael Ricks, vice president and trading and merchandising manager, said the company’s exports had picked up in the past two weeks, a reversal from the “tremendous” delays inspecting boats just after the opening of the corridor.

“In the very, very short term — and this is probably the last two weeks — the corridor is probably working better than it ever has,” Ricks said. “We’ve gotten more boats passed in the last 10 days that we’ve had in the last two months.”

Renewing the export pact is a priority for China, which listed that goal as number 9 in its 12-point plan to resolve the war in Ukraine. While the UN-brokered grain corridor deal has boosted shipments, Ukrainian traders and authorities have said that Russia is purposefully slowing the pace by delaying required ship inspections.

Total Ukrainian shipments of corn, wheat and barley can reach 4 to 6 million tons per month with the corridor open, compared with just 2 million by rail, Cargill said. Grain exports hit 4.908 million tons in February via all means of transport, government data show. That’s just below the nearly 5 million shipped in December, the highest since the war began.

Ricks added that the company’s export facilities — which earlier faced electricity shortages — are now back to operating three shifts, instead of just one. Traders also have a better handle on how to ship grain over land.

“The movement by a barge, rail and truck to Constanta has become much more efficient too,” he said, referring to Romania’s main grain export port.

Source: Bloomberg

To read the original news report, please go to: https://www.bloomberg.com/news/articles/2023-03-06/cargill-is-optimistic-landmark-ukrainian-grain-export-deal-will-be-renewed

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