The Black Sea: How Russia and Ukraine Shape World Grain Prices
Published · 3 min read
The farmland north of the Black Sea - southern Russia and Ukraine - has become one of the most important sources of the world's grain and vegetable oil. Its harvests, its ports and the export policies of both governments move prices far beyond the region, from bread in Egypt to animal feed in Asia.
Their share of world exports
In 2024, Russia was the world's largest wheat exporter with 16% of global wheat exports, and Ukraine ranked fourth with 10%; together about a quarter (FAOSTAT). Ukraine alone shipped 15% of world corn exports, and the two countries together supplied almost 60% of world sunflower oil exports - mostly as oil rather than seed, which they crush at home. Their grain is largely sold to importers around the Mediterranean, in the Middle East, North Africa and Asia.
War and shipping routes
Russia's invasion in February 2022 closed Ukraine's seaports, and prices spiked. Under the UN- and Türkiye-brokered Black Sea Grain Initiative, Ukraine shipped 32.9 million tonnes of agricultural products until Russia ended the deal on 17 July 2023. Since August 2023 Ukraine has run its own shipping corridor along the Ukrainian, Romanian and Bulgarian coasts, alongside exports through its Danube ports and by rail and truck into the EU. The extra overland flows led Poland, Hungary and Slovakia to restrict imports of Ukrainian grain in 2023 to protect their own farmers. War risk still shows up in freight and insurance costs, which widen the gap between Black Sea and world prices.
Russia's export duties and quotas
Since June 2021 Russia has charged a floating export duty on wheat, corn and barley that rises with world prices, and it sets an export quota for the second half of each season, first introduced for 15 February to 30 June 2021. Both measures keep Russian domestic grain cheaper than the world price - good for Russian flour mills and livestock farmers, less so for grain growers, some of whom have planted less wheat in response. Changes to the duty or quota can move world prices within days, as described in Trade Policy and Tariffs.
What to watch
Summer weather in the steppe of southern Russia and Ukraine, where heat and drought hit yields in 2024; the size of Russia's quota and duty; attacks on ports and ships; and freight and insurance rates. Because the region's crops reach the market right after harvest, from July onwards, Black Sea news often sets the tone for world grain prices in the second half of the year.
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Frequently Asked Questions
- Why do Russian and Ukrainian harvests matter so much?
- Because together they supplied about a quarter of world wheat exports and almost 60% of sunflower oil exports in 2024 (FAOSTAT), so a weak harvest or a blocked port removes a large share of what importing countries can buy.
- What was the Black Sea Grain Initiative?
- An agreement brokered by the UN and Türkiye in July 2022 that let Ukraine ship grain from its Black Sea ports during the war; 32.9 million tonnes were exported before Russia ended it on 17 July 2023.
- Why does Russia tax its own grain exports?
- To keep domestic flour and feed prices down and earn revenue when world prices are high. The floating duty rises as world prices rise, so it also dampens how much of a world price increase reaches Russian farmers.