Erdogan Says Putin May Return to Grain Deal

Turkish President Recep Tayyip Erdogan has said he plans talks with Vladimir Putin that could lead to the resumption of the Black Sea grain deal. Russia insists on returning to the deal on its own terms, and Erdogan believes it is worth considering. On the other hand, analysts believe that Russia’s recent actions are trying to push up the prices of an important export item.

“I believe that by discussing this issue in detail with President Putin, we can achieve a continuation of these humanitarian efforts” to export Ukrainian grain, Al Jazeera reports, citing Turkish broadcaster Haberturk. Erdogan spoke to reporters on the plane as he was returning from a tour of the Persian Gulf.

A new grain deal, but between Russia and Turkey, is “acceptable and possible”, but “only after the conditions that the president spoke about are fulfilled,” Putin said on Friday, Russian Deputy Foreign Minister Sergei Vershinin: “They will be met – we are ready to consider all options.”

“We’re very close <…> traditional interactions with Turkey, and now we are in contact with them and we are discussing what to do in the current situation,” he added.

Russia demands an improvement in the possibility of exporting food and paying for it, e.g. by connecting the Russian Agricultural Bank to the SWIFT system, as well as fertilizers. Erdogan called on Western countries to consider these conditions.

Meanwhile, analysts believe Russia’s recent moves are aimed at boosting grain prices, which have fallen partly because of record exports, and eliminating rival Ukraine.

Russia’s wheat exports will reach a record 4.1 million tons in July, almost 50% above the average, according to Sovecon’s forecast. In addition to a good harvest in Russia itself, some of the supplies appear to be grain from the occupied Ukrainian territories.

In 2023-2024, exports of Russian wheat will amount to 47.5 million tons, compared to 45.5 million tons in the agricultural year that ended in June, which was already a record, the US Department of Agriculture predicts.

After the announcement of Russia’s withdrawal from the grain deal, the threat of sinking all ships sailing to Ukraine’s Black Sea ports, and mass strikes at the granaries and ports of Odessa and Mykolaiv, the prices of wheat on the Chicago Stock Exchange increased by 12 percent since the beginning of the week, and corn by more than 9 percent.

The Kremlin is willing and able to deliver price increases, Valerio Antonini, CEO of Quanton Commodities, told The Wall Street Journal:

“Russia is now probably the largest supplier of wheat in the world, and Ukraine is its competitor. Therefore, if Ukrainian ports are closed, Russia will have more opportunities,” says Masha Belikova, an analyst at Fastmarkets.

“We are ready to consider various options for the further continuation of grain supplies to the world market – both grain and fertilizers,” Vershinin said.

Erdogan warned that breaking the grain deal would have negative consequences, ranging from rising food prices to shortages in several regions, which could lead to new waves of migration. Part of Ukrainian grain is not sold on the open market, but delivered to the UN World Food Program (WFP), which distributes it to poor countries. Under the grain agreement, Ukraine exported 32.8 million tons of wheat, corn and other products during the year. More than half of this amount went to developing countries, including through WFP, which purchased 313 tons of wheat for distribution to drought-stricken people in Ethiopia, Kenya and Somalia.