The Economist: War in Ukraine Will Cripple Global Food Markets (1)
Finance & economics
Agricultural commodities: grain storm
War in Ukraine will cripple global food markets
In october 1914 the Ottoman Empire, having just joined the first world war, blockaded the Dardanelles Strait,
the only route for Russian wheat to travel to Britain and France.
The world had entered the conflict with wheat stocks 12% above the five-year average,
but losing over 20% of the global traded supply of the crop overnight set food markets ablaze.
Having risen by a fifth since June 1914, wheat prices in Chicago, the international benchmark, leapt by another 45% over the following quarter.
Today Russia and Ukraine, respectively the largest and fifth-largest wheat exporters, together account for 29% of international annual sales.
And after several poor harvests, frantic buying during the pandemic and supply-chain issues since, global stocks are 31% below the five-year average.
But this time it is the threat of embargoes from the West that has lit a bonfire—and the flames are higher than even during the Great War.
Wheat prices, which were already 49% above their 2017-2021 average in mid-February,
have risen by another 30% since the invasion of Ukraine started on February 24th.
Rabobank, a Dutch lender, reckons wheat prices could climb by another third.
But the damage to global food supply will extend far beyond the grain—and last longer than the war itself.
Together Russia and Ukraine export 12% of the calories traded worldwide.
They rank among the top five exporters of many oilseeds and cereals, from barley and corn to sunflowers, consumed by humans and animals.