The two-month extension was agreed on Wednesday, a day before Russia could have quit the pact over obstacles to its grain and fertilizer exports.

"Ultimately, it’s great news that the Black Sea Grain deal has been renewed, avoiding the worst-case scenario of a cancellation," Rabobank commodities analyst Paul Joules said.

"Given that Russia has repeatedly expressed its unhappiness with the deal, the extension came as a surprise to the market, and a result, wheat futures declined sharply following the announcement."

Wheat prices on the Chicago Board of Trade Wv1 fell nearly 2% on Thursday to a two-week low of $6.25-1/2 a bushel after sliding by more than 3% on Wednesday.

Moscow has been seeking to remove obstacles to the export of Russia"s grain and fertilizer, including the reconnection of its agricultural bank (Rosselkhozbank) to the SWIFT payment system.

Other demands have included the resumption of supplies of agricultural machinery and parts, lifting restrictions on insurance and reinsurance, the resumption of the Togliatti-Odesa ammonia pipeline and the unblocking of assets and the accounts of Russian companies involved in food and fertilizer exports.

Ukraine had sought a longer extension and there remained uncertainty about the future of the pact beyond the next two months which could make farmers in the war-torn country less confident about planting crops this spring.