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The quadrilateral Black Sea Grain Deal, which has facilitated the passage of critical wheat supplies from Eastern Europe through the Bosphorus Strait since last summer, is in jeopardy once again. The deal was recently extended through mid-May, but Russia is already signaling they are prepared to withdraw from the agreement if new terms are not agreed upon. Russia has been gradually shifting away from compliance with the deal’s terms since the start of the year.

At particular issue are Russian fertilizer shipments and the Russian Agricultural Bank’s inability to access the SWIFT international payments system. A cancellation of the Black Sea deal would strangle global grain supplies and help Russia continue their campaign against Ukraine’s fractured economy, but it could damage Russia’s own ability to fund their war effort as well. 

Related ETFs: Invesco DB Agriculture Fund (DBA), Teucrium Wheat Fund (WEAT)

Wheat futures have resumed a near-constant slide, wiping out a short-lived rally in January and February. After a massive spike to 14-year highs of nearly $12.80 per bushel in May 2022, which followed Russia’s formal invasion of Ukraine and the simultaneous blockading of its ports, the price of wheat has now tumbled back well below its price at the start of the incursion on February 24, 2022. In fact, wheat futures touched a 22-month low just this morning.

Despite this downturn in wheat, one of the most critical agreements maintaining the fluidity of the global grain trade is once again at risk of being severed. That agreement is the Black Sea Grain Initiative, a quadrilateral deal between Russia, Ukraine, Turkey, and the UN to assure agricultural commodities can safely transit through the Black Sea and through Turkey’s Bosphorus Strait, the gateway between the Black Sea and the Mediterranean Sea. There, observers from all parties have a chance to inspect the cargoes before any ship can pass. Unloading of cargo in Ukraine is monitored by a joint coordination center in Istanbul. Russia and Ukraine are among the world’s largest exporters of wheat, making the initiative a critical facility for global grain supplies. Ukraine has shipped more than 28 million tons of food products through the Black Sea route since the signing of the deal.

Russian Foreign Minister Sergey Lavrov on Tuesday renewed threats of abandoning the Black Sea Grain Initiative, outlining demands that the Russian Agricultural Bank, or Rosselkhozbank, should be allowed to return to the SWIFT banking system. Russia cites their exclusion from SWIFT and…

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