Due to the war in Ukraine, grain exports on the Black Sea have come to a virtual standstill. As a result, grain prices are rising, because the threat of shortages means that traders around the world are buying at virtually any price. According to Ukrainian Agriculture Minister Mykola Solsky, Ukraine used to export a good 5 million tons of grain a month. Due to the war, it was just 200,000 tons in the just 4 percent of that. And it is likely to be even less in the coming months.
Wheat price rises above 400 euros per metric ton
Even before Easter, wheat prices topped the mark of over 400 euros per ton. According to traders, grain prices will rise even further in the coming weeks. But it is not only wheat that is affected; prices for corn, barley and rapeseed are also rising massively. After the first analysts commented on a possible shortage of grain because of the war on the Black Sea, major importers are buying at almost any price.
Poor weather conditions in the USA and South America drive up grain prices further
Grain prices rose steeply throughout the world market. In the USA, corn prices reached their highest level in 10 years. This is also due to the unfavorable weather conditions for corn cultivation in the USA and throughout South America. A failed harvest in these regions, combined with shortfalls from Ukraine and Russia, could lead to a supply shortage worldwide.
USA expects worst grain harvest since 1996
The U.S. Department of Agriculture (USDA) reported that corn planting in the U.S., due to unfavorable weather conditions, was not even 4% complete after Easter, well below the five-year average. In addition, only 30% of winter wheat stands in the U.S. are in good condition. In the U.S., 69% of wheat acreage is in areas that have been affected by a major drought. For this reason, analysts are also expecting the worst harvest result in the USA since 1996.
Ukraine can not export grain due to blocked ports
There are 20 million old cereals in Ukrainian warehouses that cannot be exported due to the ongoing fighting and blockades. This means that the farmers affected are losing the income they need to buy seed and fertilizer for the current planting campaign. In addition, the harvest of winter cereals is imminent. In 3 months, this will bring additional quantities into the warehouses that cannot be sold due to the blocked ports. It is virtually impossible to transport the accruing quantities by land.
International Monetary Fund warns of very dangerous situation
Meanwhile, the International Monetary Fund (IMF) has lowered its global growth estimates for 2022 and 2023. The rise in food and energy prices caused by the war in Ukraine is putting massive pressure on fragile economies. The IMF has already warned the world’s governments of a very dangerous situation.
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