Analysis and Studies - Products analysis
Wheat Prices Rise: the situation after the war
March 17th 2022
Causes and trends regarding the food sector and wheat
Food prices are rising: with the passing of time, the main commodities have seen an average increase of 20% in their price. Normally there are goods that determine the level of price in one or more countries; without a doubt, an example of these is wheat.
Such phenomena is caused by many factors including rising transportation costs, supply chain disruptions and Covid-19 measures. The war is Ukraine however will continue to push up food prices as the supply and trade with Ukraine and Russia is cut in the short and, possibly, long term.
Why such an impact is taking place? Think that Ukraine and Russia make up together nearly 30% of all wheat exports globally (Ukraine 10, Russia 20%). If this stake of the whole global market of wheat misses, then all the countries involved are inevitably affected. Most of this wheat is imported by countries in the Middle East and North Africa.
Not only trade has stopped, clearly: production of wheat is possible if the farmers are available for working in their fields and not fighting a war. Russian production and trade is going forward until now, but abroad concerns about supply chains disruption push up the wheat prices on the various trading boards.
Higher wheat prices will translate into higher food prices in general, but specifically they will depend on the dependence of a country or farmer to the countries in conflict. The most vulnerable countries, namely the ones that rely most on wheat (and energy) of Ukraine and Russia and have put a high trust on these nations will suffer the consequences.
Top exporters and top importers (source OEC)
Of the 2019 world trade data, Russia appeared as the top exporter with $8.14B, more than 20% of the total trade value $44.1B. The other top exporters were United States ($6.94B), Canada ($5.97B), France ($4.54B), and Ukraine ($3.11B).
In the same year the top importers of Wheat were Egypt ($4.67B), Indonesia ($2.31B), Turkey ($2.15B), Italy ($1.69B), and Philippines ($1.63B). The average tariff was 11.6%.r