Photo courtesy of Envato Elements
From Staff Reports
Wheat prices are skyrocketing because of exports from Ukraine and Russia being at a halt. Chicago Board of Trade futures are at the highest levels since 2008. Prices have risen 60 percent since early February as a reaction to supply shortage fears.
Currently, Russia is in full combat mode invading Ukraine. This is significant because, between the two countries, they account for 30 percent of global wheat exports and supply grain to Asia, Africa, and the Middle East.
In addition, the Russia-Ukraine war has many ports closed in Ukraine along with other transportation links and hubs. Many farmers in Ukraine are questioning whether they will plant crops in the spring.
In a tweet, University of Illinois agricultural economist wrote: “I am convinced it is going to be the biggest supply shock to global grain markets in my lifetime.”
China is looking to book commodity supplies from other countries now. It just recently booked several cargoes of U.S. soybeans and corn, which is also contributing to higher grain prices because they are securing these loads at a time of already high prices.
Then there is input supply and costs. Russia is one of the most important countries for producing and exporting ingredients needed for fertilizer. As some countries put in restrictions or lessen their dealings with Russia, Russia could respond by decreasing or not allowing for the export of those ingredients, such as potash.