Investing.com -- Grain prices are maintaining their recent levels even as discussions continue to bring an end to the conflict between Russia and Ukraine. Despite the upheaval caused by Russia’s invasion of Ukraine in 2022, which led to a spike in grain prices due to supply chain disruptions and soaring energy costs, a peace agreement is not expected to significantly reduce these prices.

The resilience of grain prices can be attributed to the recovery of Ukrainian grain production from war-related setbacks. While there has been an anticipated decrease in Ukraine’s corn and wheat output for the 2024/25 season by approximately 15% compared to pre-war levels, this is largely due to unfavorable weather rather than the conflict itself. In fact, Ukraine’s grain exports have remained broadly consistent with pre-war averages. In contrast, Russian wheat exports have seen an increase since the invasion.

Additionally, the absence of direct sanctions on Russian agricultural goods means that any easing of sanctions is unlikely to have a substantial effect on the grain markets. The majority of Russia’s wheat exports go to countries that have not imposed sanctions on Russian goods. Furthermore, Black Sea transshipments have rebounded to 63% of the levels seen before the war, as geopolitical tensions have eased and insurance costs have decreased. Grain prices have already adjusted, approaching pre-war figures as energy costs have moderated.

Capital Economics has weighed in on the situation, emphasizing that while the cessation of hostilities could marginally boost Ukraine’s agricultural production, it will be a gradual process. The firm suggests that other factors, such as growing conditions and input costs, will have a more significant influence on grain price trends in the upcoming years. Capital Economics also notes that if their predictions for lower-than-consensus oil prices come to pass, this could lead to a decrease in agricultural prices based on historical trends.

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