Russia’s weekend backtrack from a United Nations-brokered deal to export Black Sea grains is likely to hit shipments to import-dependent countries, deepening a global food crisis and sparking gains in prices.

Hundreds of thousands of tonnes of wheat booked for delivery to Africa and the Middle East are at risk following Russia’s withdrawal, while Ukrainian corn exports to Europe will get knocked lower, two Singapore-based traders said.

Russia on Saturday suspended participation in the US grain deal for an “indefinite term”, after what it said was a major Ukrainian drone attack on its Black Sea fleet in Crimea.

“If I have to replace a vessel which was due to come from Ukraine, what are the options? Not much really,” said one Singapore-based grains trader who supplies wheat to buyers in Asia and the Middle East.

Chicago wheat futures on Monday jumped more than five per cent and corn rose over 2pc from the fears over supplies.

Earlier this year global wheat prices jumped to an all-time high and corn hit a 10-year top as Russia’s invasion of Ukraine added fuel to a rally set off by adverse weather and Covid-19 supply disruptions.

Australia, a key wheat supplier to Asia, is unlikely to be able to fill any supply gap, with shipping slots booked right up to February, traders said.

Shares in Australia’s Graincorp — which posted a five-fold jump in H1 profit due to supply constraints arising from the Russia-Ukraine conflict — rose more than 7pc.

No ships moved through the established maritime humanitarian corridor on Sunday. The United Nations, Turkey and Ukraine, however, pressed ahead to implement the Black Sea grain deal and agreed on a transit plan for Monday for 16 vessels to move forward, despite the withdrawal of Russia.

“We have to see how the situation unfolds. It is not clear if Ukraine will continue to ship grains and what happens to Russian exports,” said the Singapore-based grains trader.

Read: Russia putting world in danger of famine, warns EU

Wheat, corn and vegoils

Asian buyers booking Ukrainian wheat cargoes include Indonesia, the world’s second-largest importer of grain, although the region typically relies on Australia and North America.

In recent deals, Indonesian millers bought four cargoes or around 200,000 tonnes of Ukrainian wheat for November shipment in deals signed over the last few weeks, traders said. Some Vietnamese feed mills that bought Ukrainian wheat are also likely to suffer.

Last week, the Trading Corporation of Pakistan bought about 385,000 tonnes of wheat in a tender likely to be sourced from Russia and Ukraine.

“We are not sure if Russia will continue to export wheat or it will be safe for vessels carrying Russian wheat to ship from the Black Sea even as Ukrainian exports remain blocked,” said a second Singapore-based trader at an international company.

Ukraine’s corn exports to Europe booked for November are likely to be hit as well.

“As far as Europe is concerned, corn is a bigger issue than wheat as we are getting into peak season for Ukrainian corn in November,” said the second trader.

Russia’s decision is expected to support world vegetable oil prices as it threatens Ukraine’s sunflower oil exports to key destinations, including top edible oil importer India.

Malaysian palm oil futures jumped more than 4pc on Monday.

Under the UN-brokered grains deal, a Joint Coordination Centre (JCC) made up of UN, Turkish, Russian and Ukrainian officials agrees on the movement of ships and inspects the vessels. More than 9.5 million tonnes of corn, wheat, sunflower products, barley, rapeseed and soy have been exported from the Black Sea since July.

Although global agricultural commodity prices have come off record highs in recent months, local retail food prices remain high and now face further upside.

“Typically, it takes about two months for higher grain prices to filter through the supply chain and impact consumers at the retail level,” said a Sydney-based analyst.

“But food processors do not have much forward coverage, so it is likely to be a lot quicker.”

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