By Swann Collins, investor, writer and consultant in international affairs – Eurasia Business News, March 6, 2022
Russia is the world’s largest exporter, and Ukraine the fourth, with 75% of its production exported.
Picture : View on a wheat field. Photo credit : Eurasia Business News
Wheat prices hit a record price at closure on March 4, reaching € 396.25 per ton on Euronext, for deliveries in March. The highest price in the day was € 426 per ton.
In November 2021, the ton of wheat was priced € 284 per ton.
The war in Ukraine since February 24 has disrupted global markets, which worry about surging oil and gas prices and soaring wheat prices, as wheat exports from Russia and Ukraine cover 30% of the world output.
In a few days, from February 18 to March 3, wheat prices rose from € 265 per ton to € 376 on Euronext, for delivery in March, approaching its peaks of 14 years ago.
Because of the war between Ukraine and Russia, almost no ships sailed on the Black Sea since February 24, blocking wheat exports.
Russia is the world’s largest exporter, and Ukraine the fourth, with 75% of its production exported. According to the Russian Ministry of Agriculture, grain exports from Russia in the 2020-2021 agricultural year amounted to 48 million tons, of which 38.4 million wheat. As of November 2021, grain exports amounted to 14 million tons, which is almost 30% lower than in the same period of the previous agricultural year.
Rising grain prices forced the Hungarian government to stop its exports, Hungarian Agriculture Minister István Nagy said on March 4. For this season, Hungary has already sold about 127,000 tons of soft wheat abroad.
Moldovan authorities took similar decision, and temporarily halted the Moldova’s exports of wheat, maize and sugar since the beginning of the month.
According to experts, the United States and India could also find new buyers for their wheat production and take the place of Ukraine and Russia in wheat supplies.
The consequences of the events in Ukraine will be reflected on all continents in the world, in particular, there is a risk of a deterioration in the situation with global food security. United Nations experts for food security are now assessing the impact of the war in Ukraine on wheat, crops and sunflower oil supplies in Africa and the Middle East.
Gilbert Houngbo, who heads the International Fund for Agricultural Development (IFAD), a special UN agency, stated on Twitter that :
“Conflict and hunger are closely intertwined. The situation in Ukraine could limit the world’s supply of staple crops, increase food prices, and exacerbate hunger.”
The IFAD considers that the fighting could limit the world’s supply of staple crops like wheat, corn and sunflower oil, resulting in skyrocketing food prices and hunger in low income countries. Thus, 40% of wheat and corn exports from Ukraine go to the Middle East and Africa, which are already grappling with hunger issues, and where further food shortages or price increases could stoke social unrest.
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