The escalation of tensions between Russia and Ukraine is likely to force buyers of wheat, corn and sunflower oil to look for alternative transportation routes, raising international food prices already close to multi-year highs, according to analysts and traders. with Reuters.
World stock markets are falling today as oil moves higher amid concerns about a Russian invasion of Ukraine as Russian President Vladimir Putin sent troops to breakaway regions of eastern Ukraine after recognizing them.
With both countries accounting for about 29% of world wheat exports, 19% of world corn supplies and 80% of world sunflower exports, traders worry that any military involvement could affect trade and cultivate a crop. massive effort by importers to replace supplies from the Black Sea region.
Wheat futures in Chicago jumped more than 2% on Tuesday, corn hit a seven-month high and soybeans also rose. All three key food and feed components have risen about 40% from their 2021 lows, thanks to declining global production and strong demand.
“Supply disruptions from the Black Sea region will affect overall global availability,” Phin Ziebell, an economist at the National Australia Bank, told Reuters. “Buyers in the Middle East and Africa will look for alternative sources.”
About 70% of Russian wheat exports went to buyers in the Middle East and Africa in 2021, according to shipping data from Refinitiv.
Traders say the escalation of tensions has already led some buyers to divert ships to other suppliers over concerns that a war could break out.
“Ships are avoiding entering the Black Sea because of the risk of war,” said a Singapore-based merchant. “Supply disruptions are already taking place.”
Lack of supplies from the Black Sea region could increase demand for wheat from the US and Canada.
World food prices are already hovering close to 10 years high, with strong demand for wheat and dairy products at the top, the UN Food and Agriculture Organization said late last year.
Source: Capital
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