The European Union is studying a proposal to allow the Russian Agricultural Bank to re-enter international payments for processing Russian fertilizer and food exports.
Partial restoration of Russian international banking transactions would be a concession to Moscow intended to secure continued Ukrainian grain exports across the Black Sea.
The international agreements on this (including with the UN and Turkey) expire on July 17, and it does not look like Moscow is prepared to extend the free passage for a fourth time. Under the agreement, Ukraine exported more than 32 million tons last year, mainly maize and wheat.
Moscow reiterated on Monday that it was pessimistic about prospects for extending the deal. There was little immediate reaction to global grain markets on Monday with wheat prices virtually unchanged.
“There is a general belief in the market that the supply agreement with Ukraine will not be renewed unless Russia gets substantial concessions,” a European grain trader told the Financial Times (FT).
Due to the Western boycott of Russia, the country has been closed off from international SWIFT payments since last year. “Easing banking sanctions would be a quick method of giving something to Russia,” the trader said, adding that there were still many doubts about whether the deal would be extended.
As two of the world's largest agricultural producers, Russia and Ukraine are major players in the markets for grains and oilseeds ranging from wheat and barley to rapeseed and sunflower oil. Russia is also dominant in the fertilizer market.
Apart from restoring SWIFT access, Russia is also seeking to resume supplies of agricultural equipment and parts, and to lift restrictions on insurance and reinsurance.