Partial restoration of Russian international bank transactions would be a concession to Moscow, intended to ensure the continuation of Ukrainian grain exports through the Black Sea.
The international agreements on this matter (also involving the UN and Turkey) expire on July 17, and it does not appear that Moscow is willing to extend the free passage for a fourth time. Under this agreement, Ukraine has exported over 32 million tons, mainly corn and wheat, in the past year.
Moscow reiterated on Monday that it was pessimistic about prospects for extending the deal. There was little immediate reaction in global grain markets on Monday, with wheat prices remaining almost unchanged.
“There is a general belief in the market that the supply agreement with Ukraine will not be extended unless Russia is granted substantial concessions,” a European grain trader told the Financial Times (FT).
Due to the Western boycott of Russia, the country has been cut off from the international SWIFT payment system since last year. “Easing banking sanctions would be a quick way to give Russia something,” the trader said, adding that many doubts remain about whether the deal will be prolonged.
As two of the world's largest agricultural producers, Russia and Ukraine are key players in the markets for grain 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 the resumption of supply of agricultural machinery and parts, as well as lifting restrictions on insurance and reinsurance.