(Bloomberg) -- Wheat dropped following the renewal of an agreement that allows Ukraine to safely export grains out of key Black Sea ports.

Wheat futures in Chicago fell 1.4% to settle at $7.0075 a bushel on Monday, the biggest drop in more than a week. The top two commodities shipped under the deal are wheat and corn, which also fell. The Black Sea Grain Initiative has enabled exports to flow since it was brokered by the United Nations and Turkey in July, contributing to a decline in food inflation. Russia’s invasion of Ukraine sent wheat futures soaring in the first half of 2022 on fears of severe supply disruptions.

Ukraine Infrastructure Minister Oleksandr Kubrakov said over the weekend that the pact had been prolonged for another 120 days, but Russia and an unnamed Turkish official said the extension was for 60 days. The discrepancy will likely add a risk premium compared to if both sides agreed from the start, said Dennis Voznesenski, an agriculture analyst at Rabobank Group based in Sydney. 

“If it only lasts for 60 days, it will expire just before winter crop harvest in Ukraine,” he said. “At that point Russia would likely have more bargaining ability because the world will need the Ukrainian grain more from a seasonal perspective. If it was 120 days it covers the initial harvest period at least.”

Investors are also watching the banking sector for any impact on commodities after last week’s turmoil. Early readings of UBS Group AG’s agreement to buy Credit Suisse suggest sentiment is turning for the better.

Soybean futures rose after the Buenos Aires Grain Exchange slashed its forecast for Argentina’s crop to the smallest on record last week. The nation is enduring its ninth heat wave of the growing season, compared with a typical three or four.

--With assistance from Jen Skerritt and Richard Annerquaye Abbey.

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