Escalating tensions between Russia and Ukraine, the world’s top food producers, could force buyers of wheat, corn and sunflower oil to seek alternative sources of imports, boosting already Global food prices near multi-year highs rose further.
Europe’s eastern flank is on the brink of war after Russian President Vladimir Putin ordered troops into breakaway areas in eastern Ukraine, leading to a slump in global stock markets and a surge in crude oil prices on Tuesday.
With the two countries accounting for around 29% of global wheat exports, 19% of global corn supplies and 80% of global sunflower oil exports, traders fear that any military conflict could affect the shipment of crops and prompt importers to rush to Busy importing from elsewhere to replace supply from the Black Sea region.
Chicago wheat futures jumped more than 2 percent on Tuesday, corn hit a seven-month high and soybeans also rose. All three major food and feed ingredients have rebounded about 40% from their 2021 lows, buoyed by lower global production and strong demand.
“Supply disruptions in the Black Sea region will affect overall global supply,” Phin Ziebell, agribusiness analyst at National Australia Bank, told Reuters. “Buyers in the Middle East and Africa will seek alternative sources.”
About 70 percent of Russia’s wheat exports in 2021 are sold to buyers in the Middle East and Africa, according to Refinitiv shipping data.
Traders said the heightened tensions had already led some buyers to switch ships to other suppliers, fearing that any outbreak of war would lead to long delays in loading.
“Vessels are avoiding the Black Sea because of the risk of war,” said a Singapore-based trader. “Supply disruptions are already starting to appear.”
Shortages in the Black Sea region could push up demand for U.S. and Canadian wheat.
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