Wheat and soybeans have risen to nine-year highs, while corn has scaled to an eight-month peak, all due to fear and uncertainty over the Ukraine-Russia conflict.
According to reporting by CNBC, “U.S. wheat and corn futures rose by their daily trading limits on Thursday, while soybeans scaled the highest since 2012… Wheat rose for a third day, scaling its highest in more than nine years, while corn climbed to a fresh eight-month peak.”
The prices are likely soaring due to concern over global supplies, as the Russian invasion of Ukraine continues to spark uncertainty around the globe.
“Heightened tensions around Russia-Ukraine and a fair amount of uncertainty over Russian supplies over the coming months have prompted traders to keep their grain at home rather than shipping it overseas,” ING commodity strategists said in a note.
Russia and Ukraine account for approximately 29% of global wheat exports, 19% of global corn supplies, and 80% of global sunflower oil exports. Because of this, traders have become concerned that the conflict will impact crop movement, and this has triggered “a mass scramble by importers to replace supplies from the Black Sea region,” according to CNBC.
“Russia-Ukraine tensions exacerbated supply risks for the global market,” the ING strategists said as they cited still-soft wheat exports from the European Union.
The consequences of this in the United States could likely be higher food prices, and a possible global need for U.S.-produced products. The U.S. is one of the world’s largest producers of wheat and some vegetable oils. The disruptions from Ukraine/Russia could potentially drag on for months or even years, as crop production in the area could be halted and take a significant amount of time to restart.
This new addition to the already inflation-plagued economy could wreak havoc on Americans’ wallets, and the supply chain, which is already feeling the burn of pandemic-related disruptions.
According to the Washington Post, “The price changes impacted commodity prices in recent days and could flow through to higher costs at grocery stores and restaurants soon.”
Grocery manufacturers are also concerned about the effects of the conflict on supplies. Although the vast majority of ingredients and materials used in American products are sourced domestically, the economic effects of Russia’s invasion of Ukraine will be global, according to Katie Denis, vice president of communications and research for the industry organization Consumer Brands Association.
“We’re already seeing energy prices rise and commodities futures for wheat and corn spike,” she said. “That’s going to prompt concern when costs to make and ship goods continue to set records and consumer demand continues to be above levels not seen since March 2020. There is no slack in the system, making weathering disruption significantly more difficult.”