Wheat prices surge after Russia axes grain deal. And it's not good news for the world's food supply

Russia's withdrawal from a critically important wartime deal that allowed the export of Ukrainian atom crossed the Black Sea has reignited fears astir planetary nutrient security, with analysts describing the initiative's demise arsenic some an inevitable setback and a stroke to markets.

Hours earlier the agreement's expiry, Russia said Monday that it would not renew the Black Sea Grain Initiative.

The agreement, which was brokered by Turkey and the United Nations successful July past twelvemonth pursuing Moscow's full-scale penetration of Ukraine, was a uncommon diplomatic breakthrough designed to avert a planetary nutrient crisis.

"Today is the past time of the Grain deal," Kremlin Dmitry Peskov said. "When the respective parts for Russia's payment are fulfilled, Russia volition instrumentality to the deal."

The Black Sea Grain Initiative has been repeatedly elongated successful abbreviated increments, amid expanding discontent from Russia implicit perceived restrictions that bounds the afloat dispatch of its ain atom and fertilizer exports.

Russian President Vladimir Putin reiterated these complaints implicit a play telephone with South African President Cyril Ramaphosa, saying — according to a Google-translated study from the Kremlin — that the cardinal nonsubjective of supplying atom to countries successful need, including those connected the African continent, had not been achieved.

Wheat, maize and soybean prices each roseate connected the news. Wheat futures jumped 3% connected Monday, hitting a precocious of 689.25 cents per bushel, its highest level since June 28 erstwhile the declaration traded arsenic precocious arsenic 706.25 cents.

Wheat prices stay good beneath the highest levels of 1177.5 cents per bushel reached successful May past year, however.

Corn futures soared to a precocious of 526.5 cents per bushel, portion soybean futures surged to a precocious of 1,388.75 cents per bushel.

Simon J. Evenett, a specializer successful planetary commercialized and an economics prof astatine the University of St. Gallen, said Monday that Russia's withdrawal reflects the "coup de grace connected a woody that was connected its past legs." He cited U.N. shipping information that showed shipments person been steadily falling year-to-date.

"The demise of the Black Sea Deal is simply a stroke for the nations sourcing cheaper Ukrainian wheat. So agelong arsenic this doesn't trigger tons of export bans, the deal's demise is [a] insignificant disturbance," Evenett said via email.

"Going guardant what matters is whether Russia weaponizes its wheat exports," helium added. "During the past and existent harvest rhythm Russia was the world's largest supplier, exporting astir 45 cardinal metric tons."

Evenett said marketplace participants should intimately show the imaginable of Moscow imposing an export taxation summation fixed that this would apt rise atom prices further and assistance the Kremlin to concern its subject run successful Ukraine.

Since being signed successful July past year, the U.N. says the Black Sea Grain Initiative has allowed implicit 32 cardinal metric tons of nutrient commodities to beryllium exported from 3 Ukrainian Black Sea ports — Odesa, Chornomorsk and Pivdennyi, antecedently known arsenic Yuzhny — to 45 countries worldwide.

It is for this crushed that U.N. Secretary-General Antonio Guterres had described the woody arsenic playing an "indispensable role" successful planetary nutrient security.

Guterres said successful aboriginal July that the statement "must continue" astatine a clip erstwhile conflict, the clime crisis, vigor prices and different factors roil the accumulation and affordability of food, portion 258 cardinal radical look hunger successful 58 countries worldwide.

Carlos Mera, caput of cultivation commodities markets astatine Dutch cooperative Rabobank, said Monday that portion investors had been bracing for a cancellation, Russia's withdrawal was "a blow" to markets.

Mera said the inaugural had supported terms stableness and prevented shortages crossed the processing world.

"Ukraine volition present beryllium forced to export astir of its grains and oilseeds done its onshore borders and Danube ports. This volition importantly thrust up proscription costs and heap further unit connected Ukrainian farmers' profits," helium added.

"The knock-on effect of this is it could punctual them to works little adjacent season, placing further unit connected supplies going forward."

Ultimately, Mera said the improvement means low-income countries successful Africa and the Middle East volition apt go much babelike connected Russian wheat — a state that represents much than 20% of planetary wheat exports.

— CNBC's Ruxandra Iordache contributed to this report.