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Escalating tensions between major global food suppliers Russia and Ukraine are likely to force wheat, corn, and sunflower oil buyers to seek alternative shipments, Reuters reported on Tuesday, citing analysts and traders. The disruption could drive up world food prices which are already near multi-year highs, experts warn.
The two countries reportedly account for around 29% of global wheat exports, 19% of world corn supplies, and 80% of world sunflower oil exports. Traders are worried that any military engagement could impact crop movement and could force importers to replace supplies from the region.
“Disruptions in supplies from the Black Sea region will impact overall global availability,” Phin Ziebell, agribusiness economist at National Australia Bank, told Reuters. “Buyers in the Middle East and Africa will be seeking alternative sources.”
Refinitiv shipping data showed that around 70% of Russia’s wheat exports went to buyers in the Middle East and Africa in 2021.
Traders say some buyers have already diverted vessels to other suppliers over concerns that any outbreak of war would lead to lengthy loading delays.
“Ships are avoiding entering the Black Sea because of the war risk,” a Singapore-based trader said, adding that “Supply disruptions are already taking place.”
Analysts warned that a lack of supplies from the Black Sea region could lift demand for the bread ingredient from the United States and Canada.
World food prices have been hovering at their highest level in a decade, led by strong demand for wheat and dairy products.
On Tuesday, Chicago wheat futures surged more than 2%, and corn hit a seven-month high, with soybeans also on the rise. All three key food and feed ingredients have rallied around 40% from 2021 lows, lifted by declining production and robust demand.
