After months of record high global food prices, sparked in large part by the abrupt disruption of grain exports from Ukraine, the United Nations Black Sea Grain Initiative has provided some much-needed respite. With seaborne exports flowing from Ukraine again, one would expect that this will be the answer to all grain-market prayers; well, it’s not that easy.

During the closure of its Black Sea ports (from late February until early August), Ukraine was able to export about 1 to 2 million tonnes of grain per month via railway and barge. The partial re-opening of the ports has increased that volume to about 3 million tonnes per month; too little to significantly bring down domestic inventories and support Ukrainian farmers. According to estimates of the International Grains Council, Ukraine would need to export as much as 7 million tonnes of grain per month in order to free sufficient space for the incoming harvest. In addition, official sources have indicated that grain exports would need to double current levels in order for Ukrainian farmers to earn enough income to be able to cover production costs to plant next season.

In international markets, the announcement of the Black Sea Initiative immediately brought down grain prices. However, that price drop has already slowed for wheat and completely stopped in the case of maize. Opening Ukraine’s ports was clearly important to lighten up overall market sentiment; however, the current export volumes coming out of Ukraine may not be enough to sustainably bring down prices, with serious repercussions for food importing countries.

Ukraine's wheat is typically cheaper than other origins, helping moderate global wheat price levels and offering a more viable option especially for many countries in North Africa, where wheat is an important staple food. If export volumes from Ukraine remain limited and global prices stay elevated, importing wheat may prove difficult and costly, especially if the US dollar stays strong. Many countries may thus have to rely on their domestic stocks in place of imports. Already, wheat stocks in Africa are forecast to fall by nearly 10 percent from last year.

Increased exports from Ukraine will also be essential for global maize markets, which are currently spread quite thin in view of an expected fall in global production and strong import demand. With the maize export market concentrated in just four countries (Argentina, Brazil, US, Ukraine), any continued disruption or further reduction of Ukrainian exports could spell big trouble for maize markets.

So far, only vessels that are backed by the UN and Türkiye can ship out of Ukraine's Black Sea ports, and many ship owners and traders continue to be hesitant in view of the high risks involved. What is more, the initiative could expire on 18 November if one of the parties notifies its intent to terminate the agreement; a potential concern given recent statements of the Russian Federation to review the terms of the deal. While the Black Sea Initiative provides an important first step, the agreement needs to have a longer duration and scope to other ports and routes so that export flows from Ukraine can scale up further.