Wheat prices have soared past $10 per barrel, the highest price since 2008 for the staple grain, as a result of Russia’s invasion of Ukraine.
The cost of wheat futures on the Chicago Board of Trade rose by 5.4 percent to a total of $9.84 per bushel, reaching the limit for single-day price variation on this exchange before trading officially opened. On other exchanges, prices were allowed to surpass $10 per bushel, such as on the Benchmark Chicago, which saw wheat prices rise to $10.03 per bushel.
The immediate cause of this price surge is the ongoing Russian invasion of Ukraine, which has had economic ramifications throughout the global economy. On Monday, the Ukrainian government confirmed that the country’s ports would be closed for the duration of the invasion, effectively halting Ukrainian exports until the conflict is brought to a resolution.
Both Russia and Ukraine are ranked among the top five wheat exporting countries in the world. Ukraine’s fertile soil and temperate climate have caused it to be called “the breadbasket of Europe.” However, Russia surpasses Ukraine in total wheat production.
Because of sanctions on Russia and wartime supply chain disruptions in Ukraine, the global grain economy has suffered from the loss of two of the world’s biggest wheat producers, with ripple effects likely throughout the world. However, the consequences may be particularly harsh for the Middle East and North Africa, which rely disproportionately on Russian and Ukrainian grain exports.
Turkey, which is undergoing an economic crisis of its own as a result of hyperinflation, is particularly dependent on Russian and Ukrainian grain imports—85 percent of Turkey’s wheat supply comes from the two countries now currently at war. While Turkey hopes to make up for the loss of its main wheat suppliers with its own production capacity, higher prices will become an additional burden on its people beset by one of the world’s fastest-growing inflation rates.
For many countries in North Africa and the Levant, the picture is similar: Egypt also relies on Russia and Ukraine for 85 percent of its wheat imports, while Tunisia (beset by its own economic tribulations) relies on the two countries for about 60 percent of imports.
Throughout the world, the sudden interruption in the global wheat supply is being felt in record prices for one of the most fundamental staples of the world’s diet. In addition to rising fuel and electricity costs and an ambient level of rising inflation throughout the world economy, the loss of grain imports from Russia and Ukraine will be just one burden among many for consumers around the world.
From The Epoch Times