San Francisco Frontiers - Turkey still hopeful of extension to Ukraine grain deal

The current deal expires just before midnight on Saturday, Istanbul time.

"The deadline is approaching," Turkey's Defence Minister Hulusi Akar said Friday.

"We are in touch with both Ukraine and Russia about extending the agreement under its original terms."

Russia's full-scale invasion in February 2022 saw Ukraine's Black Sea ports blocked by warships.

But a deal brokered by Turkey and the United Nations in July 2022 -- and signed by Kyiv and Moscow -- has allowed for the safe passage of exports of critical grain supplies.

Ukraine was one of the world's top producers, and the so-called Black Sea Grain Initiative has helped soothe the global food crunch triggered by the conflict.

The original terms Akar referred to -- according to the deal -- were for the 120-day extensions to be automatically renewed for the same period unless one of the parties says otherwise.

The initial agreement was extended in November until March 18, and should -- in theory -- be extended another 120 days after it expires at 11:59 pm Istanbul time Saturday (2059 GMT).

But on Monday, after a meeting with senior UN officials in Geneva, Moscow announced a proposal to extend the agreement for only 60 days.

Kyiv quickly made its displeasure clear, pointing out that the proposal departed from the period provided for in the original agreement, though Ukrainian officials were careful not to reject it out of hand.

By Friday, no one was able to say with any certainty what would happen when the deadline expired.

"We very much hope that the initiative will continue and the ships will continue to flow," said Stephane Dujarric, spokesman for UN Secretary-General Antonio Guterres.

- Moscow's demands -

Moscow decided to shorten the deal's extension due to its concerns that a parallel agreement on Russian food and fertiliser exports was not being respected.

Under that deal, also signed in July 2022 with the UN, those products were supposed to be exempt from the sanctions applied against Russia by Kyiv's allies.

But this was not happening, Moscow complained.

"Our further stance will be determined upon the tangible progress on normalisation of our agricultural exports, not (in) words, but in deeds," said Deputy Foreign Minister Sergey Vershinin, who led the Russian delegation during Monday's talks with UN officials

This includes "bank payments, transport logistics, insurance, and unfreezing of financial activities and ammonia supplies via the Tolyatti-Odessa pipeline", he said.

In response, Ukraine's infrastructure minister Oleksandr Kubrakov said that "Russia's position to extend the deal only for 60 (days) contradicts the document signed by Turkey & the UN".

"We're waiting for the official position of (the UN and Turkey) as the guarantors of the initiative," he said on Twitter.

- 'Risk factor' -

The UN has been saying since Monday that it is doing everything it can to save the agreement, which has helped bring the explosion in food prices since Russia's invasion of Ukraine under control.

On Friday, UN humanitarian chief Martin Griffiths repeated that message.

"We continue to engage closely with all parties," he said.

At the same time, they were "sparing no effort" to resolve the problems raised by Russia over its agreement.

More than 29.1 million tonnes of grain have left Ukraine's ports since the original deal was signed last July, while only a fraction of the 260,000 tonnes of Russian fertiliser stored in European ports has been released.

In the meantime, wheat and corn prices have returned to their pre-war levels, although oilseeds such as rapeseed and sunflower are much lower.

"For the moment, the market is betting on the fact that it will get an extension of 120 days," Edward de Saint-Denis, a cereals trader with Plantureux, told AFP.

"If that is the case, the 60 days proposed by Moscow will be used to continue negotiations for a longer extension."

But Michael Zuzolo, president of Global Commodity Analytics and Consulting, said 60 days was "not enough to charter a vessel and insure its cargo".

And if the deadline passes with no clear agreement on an extension, "it will be a risk factor", said Sebastien Poncelet, an analyst with agricultural markets specialist Agritel.

"The markets will take that into account," he said.

K.Torres--SFF