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Monday, 12 September 2022

Erdogan sides with Putin on Ukraine grain pact criticism

There’s good news and bad news on the global food crisis this morning:

The bad news first: Is Erdogan having second thoughts on the Ukraine grain pact he brokered? Turkish President Recep Tayyip Erdogan backed Russian counterpart Vladimir Putin’s criticism of the landmark grain agreement that Turkey brokered with the UN in July, the Financial Times reported Thursday. Erdogan said that Putin was “right” in saying that shipments of Ukrainian grain were mostly going to rich countries rather than poorer ones in greater need amid a global crisis in food supply.

Yes, but… As of 8 September, less than half of shipments have gone to high-income nations, according to UN data cited by the salmon-colored paper. Some 28% of shipments were sent to lower-middle income nations, including Egypt, India, Iran and Sudan, Turkey and China had received 21% and 7% respectively, and 44% went to richer countries.

Market reax: Wheat futures spiked to their highest level since 12 July on Wednesday on fears that Putin could undo the agreement and block exports of Ukrainian grains.

The good news: France and Romania will sign an agreement today to increase exports of Ukrainian wheat to developing countries in the Mediterranean, Reuters reported, citing statements by French Transport Minister Clement Beaune to France Inter radio. A draft agreement seen by the newswire sees France working to increase efficiency and capacity at several Romanian Black Sea ports, helping it to up its wheat exports.

Is Egypt on the list? The two countries have not named target countries though we think it’s likely Egypt will be one of the beneficiaries of the agreement. It’s in the area of interest, it’s a food insecure country, and it’s the world’s biggest importer of wheat. Ukraine is also one of Egypt’s most important suppliers and — together with Russia — accounted for about 80% of our wheat before the war.

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