No Definitive Signs on Black Sea Grain Deal Heading into July

It’s been a high-stakes game of poker for Russia and Ukraine regarding the Black Sea grain deal. If both nations decide to fold and walk away with no deal, it could send agricultural commodities higher.

In mid-June, Reuters reported that the Kremlin indicated “no positive prospects when it came to renewing the Black Sea grain deal given that parts of the accord affecting Russia remained unfulfilled, but said it had not yet taken a final decision on the issue.” The two countries struck the deal last year with the help of the United Nations to continue the flow of exports out of Ukraine following Russia’s invasion.

High inflation is already putting upward pressure on food prices for consumers. The lack of a deal could add to that pressure. In that scenario, demand for commodities continues while the flow of exports out of Ukraine could suffer as the conflict rages on.

“It’s hardly possible to predict any final decision here, but I can say that judging de facto by the status quo that we have, this deal has no chance,” said Kremlin spokesperson Dmitry Peskov.

3 Ways to Trade a Pending Deal (or No Deal)

Short-term traders who want to get ahead of the potential price move in ag commodities can use funds from Teucrium. Rather than trade futures contracts directly, these funds offer simple, cost-effective exposure.

Corn and wheat are two commodities to consider, particularly with regard to a Black Sea grain deal, whether or not it happens. For wheat, the Teucrium Wheat Fund (WEAT) provides investors with an easy way to gain exposure to the price of wheat futures.

Those looking to trade corn can use the Teucrium Corn Fund (CORN), which tracks three futures contracts for corn that are traded on the Chicago Board of Trade, including 35% second to expire contracts, 30% third to expire contracts, and 35% December following the third to expire. The various contract exposures help the fund limit the negative effects of rolling contracts, especially during a market in contango.

Short-term traders or long-term investors who want an all-encompassing approach can use the Teucrium Agricultural Fund (TAGS), which is essentially a fund of funds (including the aforementioned WEAT and CORN), and it features a low 0.13% expense ratio. It combines exposure to corn, wheat, soybeans, and sugar through other Teucrium funds that focus specifically on these commodities.

For more news, information, and analysis, visit the Commodities Channel.