World grain market might be affected by Russian-Ukraine conflict

Russia’s potential military invasion of Ukraine would affect many markets, from wheat and energy prices, sovereign dollar bonds of the region to safe have assets, Reuters reports.

It is expected that any suspension of grain shipments from the Black Sea region would likely affect prices and further stimulate food inflation at a time when the affordability of food is causing serious concerns around the world following the economic disruption caused by the COVID-19 pandemic.

Four largest global exporters — Ukraine, Russia, Kazakhstan and Romania — export grain from ports on the Black Sea, which could face disruptions due to any military action or sanctions.

As per projections, Ukraine may well be the world’s third-largest exporter of corn in the 2021/22 season and the fourth-largest exporter of wheat, according to the International Grains Council. Russia dominates wheat exports globally.

“Geopolitical risks in the Black Sea region have soared in recent months, posing a potential impact on wheat prices in the future,” strategist at UBS Dominic Schnider told Reuters.

Since the start of the 2021/22 season, wheat exports from Ukraine have come to 16.57 mln t, 29% up YoY.

Wheat export from Ukraine in 2021/22 was limited to 25.3 mln t. The Memorandum of Understanding was signed by the Agrarian Ministry and grain market participants. The Government also considers milling wheat export from the country. The decision is reported to be taken in January.

Wheat supply from Ukraine in 2021/22 is projected by the USDA in its December report at 24.2 mln t, 0.2 mln t above the previous report.

Latifundist

Tags: Ukraine, Russia, grain, wheat