Moscow had repeatedly threatened to leave the pact, citing obstacles to its own exports. It last agreed to a two-month extension in May, which ends Monday. The corridor’s shutdown will hit key buyers like China, Spain and Egypt.

“Unfortunately, the part concerning Russia in this Black Sea agreement has not been fulfilled so far,” Kremlin spokesman Dmitry Peskov said, according to Russian news agency Tass. “Therefore, it is terminated.” 

The move jeopardizes a key trade route from Ukraine, one of the world’s top grain and vegetable oil shippers, just as its next harvest kicks off. It also comes after Russia on Monday said Ukrainian drones damaged a key bridge to Crimea.

The pact — brokered by the United Nations and Turkey — has ensured the safe passage of almost 33 million tons of crop exports via the Black Sea since it was signed in July 2022, helping world food-commodity prices ease from the record levels reached after Russia’s invasion of Ukraine. However, it has been bogged down by red tape and slow vessel inspections in recent months.

Benchmark Chicago wheat futures rose as much as 4.2% and corn advanced 2.5%, before paring gains. The two commodities are the top crops shipped under the deal.

Turkish President Recep Tayyip Ergodan said he would discuss the export deal with Russian President Vladimir Putin during their planned meeting in August, or perhaps sooner by phone.

“I believe Russia’s head of state Putin wants this humanitarian bridge to continue,” Erdogan said in televised comments from Istanbul. 

Moscow said it will return to the agreement once its conditions are met, Interfax reported.

European Commission President Ursula von der Leyen said on Twitter that she strongly condemned the “cynical move” by Russia. The European Union will continue to help facilitate food exports from Ukraine, she added.

Long-Term Risk

Following repeated disruptions, the shipping corridor through the Black Sea is now nearly empty, tempering the immediate interruption to world crop flows. However, the bigger risk lies longer-term, as fractured and costly export logistics could spur Ukrainian farmers to further cut harvests already shrinking under the weight of the war.

When the deal was inked, the UN agreed in parallel to improve access to Russian food and fertilizer exports. Russia remains the world’s top wheat shipper, but has demanded several obstacles be removed to bolster trade — including reconnecting an agricultural bank to the SWIFT international payments system.

The pact has ensured the safe passage of almost 33 million tons of crop exports via the Black Sea since it was signed in July 2022, helping world food-commodity prices ease from the record levels reached after Russia’s invasion.

No new vessels have been approved to join the Ukraine grain deal since late last month and Russia has blocked one of the three open ports. Ship inspection times have progressively grown longer, with fewer than one cleared per day in the first half of this month.

A lone vessel remains in the corridor Monday — the TQ Samsun — which departed over the weekend from Odesa port. Ship-tracking data shows it nearing Istanbul.

Its closure will heighten reliance on alternate trade routes via the Danube River and Ukraine’s EU neighbors, although those pathways remain expensive and some countries have pushed back against the inflow. 

The routes come “at a much higher cost of transport,” said Carlos Mera, head of agricultural commodities market research at Rabobank. “That poses questions about the future production out of Ukraine. Most of the exports will flow, but some stock build-up domestically is unavoidable.”

Some traders have signaled interest in continuing Black Sea shipments even if the deal collapses, although that would require military and government approval.