The possible price decline and increase in supply as a result of deal between Russia and Ukraine is likely to benefit all importing countries and consumers in the medium term.
If Russia keeps to the deal it has signed with Ukraine allowing for the resumption of grain exports, much needed relief will be provided to importing countries, including many in Africa.
The aim of the “grain deal”, signed between Kyiv and Moscow on July 22 2022, was to change this chaotic situation. Under the agreement Russia promised not to attack grain vessels in the Black Sea region. But this promise didn’t last long. Less than 24 hours after the deal was signed Russian missiles struck the critical Ukrainian port of Odesa.
The possible softening of prices would add to an already positive picture of global grain prices, which have come off from the record levels seen in weeks following Russia’s invasion of Ukraine. For example, the United Nation’s Food and Agriculture Organisation Global Food Price Index, a measure of the monthly change in international prices of a basket of food commodities, was down 2% in June 2022 from the previous month. This was a third monthly decline.
Implications for Africa Therefore, however marginal, a potential decline in the prices of these commodities would be positive for importing countries – and ultimately consumers. A resumption of the trade activity would release about 22 million tonnes of grains out of Ukraine. It’s also safe to assume that grain orders from Russia to various markets in the world will also increase.
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