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Record Volumes Shipped Through Black Sea Waters as Russia Issues Warning

On Monday, twelve vessels set off from Ukrainian ports carrying a record volume of agricultural products, two days after Russia suspended its role in the Black Sea grain export deal, Kyiv said.

The trade was done under the auspices of the Joint Coordination Centre (JCC) made up of U.N., Turkish, Russian, and Ukrainian officials, who agreed on the movement of ships and inspects the vessels. More than 9.5 million tons of corn, wheat, sunflower products, barley, rapeseed, and soy have been exported from the Black Sea since July.

Russia has now withdrawn from the Black Sea deal for an "indefinite term" because it said it could not "guarantee the safety of civilian ships" traveling under the pact, after an attack on its vessels by Ukraine-based militants, reported Reuters. The withdrawal comes in the backdrop of an attack on the Russian Black Sea fleet in Sevastopol, which Moscow called a terrorist attack by Kyiv aided by Britain. The deal created a safe corridor to allow exports to resume from three Ukrainian ports and helped to ease tensions regarding the escalation of the global food crisis. On Sunday, no ships moved through the corridor established by the Black Sea Grain deal because of Russian backtracking.

The Russian decision led to predictions by analysts and traders, forecasting an even steeper rise in prices.  "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. Hundreds of thousands of tons 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.

But on Monday morning, a spokesperson for Odesa's military administration said 354,500 tons had been shipped out of Ukrainian ports—a record daily volume since the pact was brokered. Among the vessels departing Ukraine on Monday was the Ikaria Angel, a vessel headed for Ethiopia with 40,000 tons of grain, Ukrainian Infrastructure Minister Oleksandr Kubrakov wrote on Twitter. "This is the 7th (vessel) chartered under the @UN @WFP. These foodstuffs were intended for the residents of Ethiopia, who faced the real possibility of mass starvation," he tweeted. Four more vessels are already being inspected by representatives of the United Nations, Turkey, Ukraine, and Russia, Kubrakov said. He also mentioned that forty more ships, aiming to fulfill the Black Sea Grain Deal will be inspected by ten inspection authorities provided by the UN and Turkey. "Civilian cargo ships can never be a military target or held hostage. The food must flow," tweeted Amir Abdullah, the U.N. official who coordinates the program.

However, due to a lack of Russian commitment to the deal, there remains a cloud of security concerns around the Black Sea maritime corridor. London-based insurers ASCOT are apprehensive about the current situation in the region as they reconsider insuring shipments going through the corridor. "From today we are pausing on quoting new shipments until we better understand the situation," Ascot Head of Cargo Chris McGill told Reuters.

Moreover, Russia continues to cast doubts about the sustainability of this initiative. "In conditions when Russia is talking about the impossibility of guaranteeing the safety of shipping in these areas, such a deal is hardly feasible, and it takes on a different character - much more risky, dangerous and unguaranteed," Kremlin spokesman Dmitry Peskov told reporters. This could affect Ukraine’s corn exports scheduled for a November release to Europe and those directed towards India and Africa. "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 a Singapore-based trader. With the other main supplier in the Asian region, Australia is also unlikely to increase exports until February, and global and local retail prices could see a further spike in the coming months. 

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