Wheat prices to remain high on sharp drop in production

The price of wheat is expected to remain high following a sharp decline in the production of the commodity in Ukraine, one of the world’s top exporters.

Production of grain in Ukraine has dropped to 65 million tonnes in the latest crop season from 108 million tonnes a year earlier, according to an official.

Ukraine Agriculture Policy Deputy Minister Dmytrasevych Markiya has warned that the prices will remain high because of the shortage witnessed in the Eastern European country in the wake of the ongoing war between Ukraine and Russia.

“The price of grain globally will increase because of a decline in production in Ukraine,” said Mr Markiya.

The decline, according to officials, has been attributed to a number of factors including high prices of fertiliser and war that interrupted farming activities.

The prices of wheat globally had shot to a high of $540 at the peak of the war between the two countries last year as the grain supply was cut short with the closure of the Black Sea corridor- a major grain route for grain to the world market.

However, a United Nations-brokered deal saw the corridor opened in June with another extension issued in November, a move that helped to ease global prices that have now settled at $370 a tonne.

The official said that it is important for the corridor to remain open even with the ongoing aggression because of the key role that it plays in the world’s food security.

“The Black Sea corridor is not only important for Ukraine but it plays a major role in the world’s food security that is why it is important for it to remain open,” he said.

Millers had anticipated that the price of the grain would drop starting this January but the latest development in Ukraine may see consumers continue paying more for wheat products.

Mr Markiya said the Ukraine government has given Kenya 2.7 million bags of wheat as a grant to help stabilise the price of the commodity in the wake of projected high prices.

Tags: price, wheat