As Russian aggression in Ukraine persists, buyers worldwide seeking to replenish dwindling wheat stocks face painfully high prices, reports Reuters.
Major wheat importers in Asia, the Middle East, and Africa—who relied on supplies from the Black Sea region—are struggling to restock, as attacks on ships and port infrastructure have virtually halted the movement of cargo since July. These disruptions have driven up wheat prices. Benchmark prices on the Chicago exchange have surged 40% from their June lows to a three-and-a-half-year high, raising the risk that some of the world’s most vulnerable consumers will once again face a new wave of food price inflation.
For the past few months, most international importers have held off on seeking alternative suppliers, hoping for an agreement between Russia and Ukraine that would allow grain shipments. Meanwhile, local stockpiles have dwindled to critical levels, particularly in Asia, a region heavily dependent on imports. Competition for supplies is expected to intensify—and prices to keep rising—until the Southern Hemisphere harvest enters the market at the end of the year. Ole Hansen, Head of Commodity Strategy at Saxo Bank, stated that the Black Sea region is crucial for grain transport; if buyers cannot source grain there, they will look elsewhere, driving prices up further. While some buyers in the Middle East and Africa are already seeking alternatives, others have indicated that their current stocks are sufficient to last until November or the end of the year before they need to source larger volumes of grain.
Russian wheat exports are projected to drop to one million tonnes in September (compared to five million tonnes in September of last year), while Ukraine could export one million tonnes this month—half the volume exported in September last year.
In the near term, the reduction in exports will hit Asia the hardest.
Ishan Hanu, an agricultural analyst at Kpler, noted that very few ships are being loaded, and even the small volumes leaving Russia or Ukraine will go to the Middle East and Africa rather than Asia. He reported that Indonesia, the world’s second-largest grain importer, received only 60,000 tonnes of grain from the Black Sea region in September—significantly less than the half-million tonnes received in September of the previous year.
Indonesian grain processors have begun seeking alternatives from other suppliers, including Argentina, and Australian grain is commanding a price 20–25% higher than grain from the Black Sea region.
Egypt, the largest grain importer, will receive significantly less grain from Russia and Ukraine compared to last year, though it does hold some reserves. A European trader noted that while Egyptian importers cannot wait indefinitely, they do have some time, as harvests from the Middle East and North Africa have recently come in. On the 20th of September, Egypt’s Minister of Supply, Sherif Farouk, stated that Egypt had turned to France and other European suppliers, thereby shifting away from the Russian and Ukrainian markets.
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