The simmering Russia–Ukraine crisis is endangering the global food supply, threatening to create food shortages and drive prices even higher, with wheat, corn, and sunflower oil among the items that will be most affected.
Russia and Ukraine combined account for roughly 80 percent of global sunflower oil exports, 29 percent of the world’s wheat exports, and 19 percent of the global supply of corn.
The shortage of wheat and corn would especially be problematic since these are staple foods in many countries. U.S. wheat futures are up by 9.72 percent since hitting a low on Feb. 3, while U.S. corn futures are up 9.34 percent in the same period.
Russian President Vladimir Putin has declared two rebel regions of Ukraine as independent states and dispatched troops to “maintain peace” in those regions, drawing criticism from the United States. The UK has already taken action, sanctioning three Russian individuals and five Russian banks. The EU and the United States are expected to soon follow with their own sanctions.
The Middle East, North Africa, and Asia would suffer the most from food supply disruptions due to a Russia–Ukraine war. Roughly 70 percent of wheat exports from Russia in 2021 went to Africa and the Middle East. In 2014, wheat prices surged by 20 percent in the two months prior to Russia taking over the Crimean Peninsula.
Fourteen nations depend on Ukraine for more than 10 percent of their wheat consumption. Lebanon imports 50 percent of its wheat from Ukraine, Libya 43 percent, Malaysia 28 percent, Indonesia 28 percent, Libya 22 percent, Bangladesh 21 percent, and Egypt 14 percent.
Ukraine estimates its grain exports to hit 56 million tons this year. Much of the export goes through two ports on the Black Sea, a region that might experience disruptions in case of a military conflict. Some buyers have already begun diverting vessels to other suppliers over concern that an outbreak of war would lead to lengthy delays in loading.
“Ships are avoiding entering the Black Sea because of the war risk,” a trader from Singapore told Reuters. “Supply disruptions are already taking place.” Nikolai Gorbachev, head of the Ukrainian Grain Association, believes a blockage of corn and wheat exports from the Black Sea region could result in corn and wheat prices spiking by 20 to 30 percent.
Another major crop that could be affected is soybeans, which tend to compete with corn for the same agricultural land. Higher corn and soybean prices would also affect several packaged products that contain these items, Sal Gilbertie, president and chief investment officer at Teucrium Trading, told MarketWatch.
“Soybean supplies are tightening rapidly due to bad weather in South America, which means both corn and soybean prices will have to compete with one another (through price increases) in order to ‘buy’ more acres this spring across the Northern Hemisphere,” he said.