China has relaxed import restrictions on Russian wheat. The move could ease concerns about food security in the world’s second-largest economy, according to CNN. The decision could also ease the impact of sanctions on Russia.
The decision to allow wheat imports from all regions of Russia was made during Russian President Vladimir Putin’s visit to Beijing earlier this month. However, the details were only announced last week by the Chinese customs administration. China had previously restricted wheat imports from Russia in some parts of the country over concerns about the presence of a fungal disease that can cause severe yield losses in wheat and other crops. Russia is the world’s largest wheat producer.
The deal is the latest in a series of agreements between Russia and China. It’s helping Beijing secure food supplies at a time when global food prices are already at near-decade highs. Russia and Ukraine provide about a third of the world’s supply.
Food security is a top priority for Chinese President Xi Jinping, who has called for increased agricultural production and diversification of imports.
The deal offers Russia a safe buyer at a time when exports to other countries could be hampered by financial sanctions or other disruptions.
“Uncertainty about potential sanctions is beginning to generate a potential supply shock,” analysts at Goldman Sachs wrote in a market analysis on Thursday. And further: “In our view, pending the resolution of uncertainty related to the rapidly escalating situation, commodity price risk remains elevated, with further increases likely expected in European natural gas, wheat, corn and oil prices from already elevated levels.”
Goldman believes Russian commodities will be “diverted to China” if demand from the rest of the world is curtailed by the sanctions.