Russia's hesitation in renewing the Black Sea Grain Initiative has caused Chicago wheat futures to hit a one-week high

On Monday a Russian delegation announced that Moscow was ready to extend the Ukraine grain export deal, only for a further 60 days, which has sent wheat prices into mayhem.

Uncertainty about the extension of the agreement has caused Chicago wheat futures to hit a one-week high on Wednesday.

Rural Bank agricultural analyst Sean Hickey believes a 60 day agreement will result in further volatility within the wheat market, as that is not enough leading time for exporters to get their ships in-and-out of the Black Sea.

"It basically causes a bit of a logistical nightmare for buyers through that grain export corridor," Mr Hickey said.

Markets are expecting Russia to extend the deal, but time is running out before it expires.

While a failure to extend the Black Sea Grain Initiative before its expiry will increase market unpredictability, it would also benefit Australian growers, according to Rabobank Research general manager Stefan Vogal.

There is the potential for a small window, if Russia doesn't renew the deal on March 19, where Australia will be well positioned to sell wheat at a premium.

"We may not get that deal right when the deadline expires, we may get a signature one week later or two weeks later," Mr Vogal said.

"In terms of price reactions, I think that is a good period for somebody to take advantage, I think it is a good opportunity."

While Mr Hickey expected a 120-day agreement, which would result in business as usual in the wheat markets, he said a 60-day agreement would create a 'bullish' market and an upswing, paired with volatility.

Mr Vogal was convinced another grain deal would be signed, as Russia relies on the support of African nations - who purchase a large quantity of Ukraine grain.

Under the current agreement, 879 shipments (777 vessels), involving 22.7 million metric tonnes of grains and related foodstuffs, have left Ukrainian ports to many countries including China, Spain and Turkiye.

Australian Export Grains Innovation Centre (AEGIC) chief economist, Ross Kingwell, said it was worth noting that traditionally the main period for exporting grain, especially wheat, out of Ukraine's Black Sea ports is from August to November.

Hence, these current negotiations are not as crucial as the later negotiations - covering the main traditional period of exports.

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"Given Turkiye's reliance on nearby Ukrainian grain it is no surprise that Turkiye and Ukraine are committed to ensuring an agreement to allow grain shipments from Ukraine's Black Sea ports for 120 days rather than 60 days, as suggested by Russia," Mr Kingwell said.

Currently, Ukraine's reduced plantings of its winter crops, including wheat and barley, are reported to be mostly in a good to excellent state.

In 2021, 7.07m hectares were planted to wheat but in 2022 only 4.98mha were planted, with quantities continuing to reduce.

"Plantings of wheat in regions directly affected by the war are diminishing yet wheat plantings in regions in the west of Ukraine are increasing, but these increased plantings do not offset the reduced plantings elsewhere," Mr Kingwell said.

Mr Vogal said he was surprised by how efficiently Ukraine was exporting wheat, as he originally thought anyone would be insane to send their export ships into a war-zone.

"They really convinced a lot of shippers to go there, and since September they have done a fantastic job," Mr Vogal said.

"They're exporting almost as much every month since September, as they have done in the previous season, which was a record season - so real respect to Ukraine."