Trade draws hope on Turkish minister grain corridor comments

8 Nov 2022 | Masha Belikova

Turkey's minister of defence has said that the government in Ankara will offer to extend the Black Sea grain corridor initiative for another year in a move that could guarantee exports from Ukraine and cap runaway prices. 

Trade sources took the move as a bearish signal amid improved supply prospects for corn and wheat, with Euronext wheat futures, and Chicago corn and wheat futures posting losses. 

Turkish, Russian and Ukrainian media sources all quoted Hulusi Akar, a former army general and now Turkey's defence minister, after he proposed the year-long extension to the deal late on Monday, but no further details were given.

However, the move comes after Turkish authorities appear to have played a vital role in bringing Russia back into the agreement after the country unilaterally, but briefly, withdrew at the end of October, and trade sources are hopeful that it is the latest signal that the grain corridor could be extended beyond mid-November.

As such, more supply is likely to bring more competitive prices in the months ahead.

“People are talking about that and so far I see that they believe there could be extension on the agreement,” one Black Sea trader told Agricensus.

“I realize that most of the buyers have stopped or slowed down their purchases and many believe that Russia somehow will continue [to participate in] the grain deal,” the trader continued, although he expected some conditions potentially around improved financing and access to bank lines to be applied.

“The market is happy for the corridor because we need to import commodities. Besides if Ukraine is in the market, we get much more competitive prices,” a second trader focussing on import market said.

“Nobody knows for sure, but everybody wants to believe it,” the trader said,

He also added that for Turkey the continuation of the grain deal is not only about more grains available for import, but also about the stable and strong flow through the Bosporus canal, as Turkey has become a vital logistics channel.

“Turkish buyers are always confident in such bearish news,” a broker said.

Meanwhile, some trade sources were not that optimistic about the corridor, with no positive changes expected till the end of 2022 year.