By Eurasia Business News – March 4, 2022
Wheat prices are soaring and reached on March 2 a maximum in 14 years. Corn prices hit a 9 years record. Russia and Ukraine are among the largest wheat and corn exporters. War in Ukraine puts great pressure on the wheat and corn supplies.
Wheat prices rose to a maximum since 2008 due to expectations of supply problems amid the military conflict in Ukraine. As a result, on March 2, quotations of May wheat futures soared by almost 8%, to $ 10.28 per bushel. Chicago futures for wheat prices continued to surge higher on March 3, jumping another 7% to $11.34 per bushel—trading at their highest level since 2008.
At the closure on March 3, May quotations of soft winter wheat CBOT in Chicago rose to $ 416.67 per ton, winter hard wheat futures KCBT in Kansas City – to $ 422.64 per ton and March futures of hard spring wheat MGEX in Minneapolis – to $ 410.88.
Corn rose about 1.3% to $7.35 per bushel, a record since 2013.
Analysts note that Russia and Ukraine are the largest wheat producers. They account for about 30% of world exports. These same countries provide a fifth of the global maize market. Now supplies from Ukraine, including by sea, are greatly disrupted. In addition, Western companies are reluctant to order grain from Russian companies. However, wheat shortages in global markets could provoke riots in fragile countries and deteriorate there the political situation.
In April 2008, “hunger riots” had shaken Egypt, Morocco, Indonesia, the Philippines, Haiti – where they had killed at least dozens of people and led to the fall of the Haitian government – as well as several African countries: Nigeria, Cameroon, Ivory Coast, Mozambique, Mauritania, Senegal, Burkina Faso. Such a scenario may repeat.
Since consumer prices are already hitting records in the US (+7.5% of annual inflation) and Europe (+5.8% of annual inflation), surging wheat and corn prices will worsen the situation. Companies will have to raise wages of workers, to keep market shares and consumption afloat. This situation will pressure the financial situation of industry professionals and may hamper economic recovery from pandemics.
Read also : How to invest in gold
Gold prices have been surging since January, amid geopolitical tensions and inflation worries in Europe and the United States. On March 4, gold prices hit $ 1,964.40 per troy ounce at the closure of London marketplace today. The yellow metal has always been a great hedge against inflation because it rises in price when the cost of living standards rises.
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