As Russian troops intensify their assault in Ukraine, seizing control of major Ukrainian cities like Kherson, wheat, corn and vegetable oil prices have risen by double-digit percentages. Wheat currently retails at $900, its highest in 14 years.
Ukraine, a major exporter of grains and sunflower oil have shut down all ports until the end of the Russian invasion. AHDB reports that Ukraine was expected to export about 5.5Mt of wheat, 13.7Mt of maize and 4.0Mt of sunflower oil before the end of the season, but the conflict frustrates this move.
Russian exports continue, but international sanctions are causing severe disruptions in exportation and credit availability, according to AHDB. Russia is expected to export 33Mt of wheat before the season ends.
With both countries’ major suppliers of grains and oilseeds to the global market, fears are mounting over potential food shortages, especially in the EU, Britain and Africa. Ukraine and Russia combine for 75% of global sunflower oil exports, accounting for 10% of all cooking oils globally. Both countries also combine to account for 23% of global wheat exports while Ukraine doubles to account for nearly 17% of the global export of maize.
The shortages in supply due to the conflict would create food insecurity and throw more people into poverty in places like Egypt, Lebanon and even Nigeria, where diets are dominated by government-subsidized bread and some staple foods are made of flour. In Europe, officials are preparing for potential shortages of products from Ukraine and increased prices for livestock feed that could mean more expensive meat and dairy if farmers are forced to pass costs to customers.
For instance, Egypt, the world’s largest wheat importer would experience increased difficulties as millions rely on subsidized bread made from Ukrainian grains to survive.
Egypt’s state procurer of wheat, which normally buys heavily from Russia and Ukraine, had to cancel two orders in less than a week: one for overpricing, the other because a lack of companies offered to sell their supplies. Sharp spikes in the cost of wheat globally could severely affect Egypt’s ability to keep bread prices at their current subsidized level.
The war is also threatening to affect wheat supplies in sub-Saharan Africa, flour millers in Nigeria believe a shortage of wheat supplies from Russia would affect the price of products like bread, a common food in Africa’s most populous country.
African countries imported agricultural products worth $4 billion from Russia in 2020, and about 90% was wheat, said Wandile Sihlobo, chief economist for the Agricultural Business Chamber of South Africa.