Status: 02/28/2022 11:45 a.m
As a result of the Ukraine war and the sanctions against Russia, the price of wheat is skyrocketing. Concerns about supply bottlenecks are growing as Russia and Ukraine so far account for a quarter of global wheat exports.
The war in Ukraine makes wheat more expensive. The recent Western sanctions against Russia and its main banks have raised concerns about potential grain supply disruptions. On the Chicago futures exchange, US wheat futures jumped about nine percent to $9.2025 a bushel. It thus reached the highest value for more than nine years.
Russia and Ukraine with high world market share
Numerous raw materials exported from Russia had already become much more expensive in the past few weeks. The country is one of the most important wheat producers in the world. But Ukraine is also one of the major wheat producers. Both countries last together covered about a quarter of the global wheat trade – according to figures from 2020, around 17.7 percent of global wheat exports went to Russia and 8.0 percent to Ukraine.
Ukraine is also known as the “granary of Europe”. The country is one of the largest wheat exporters in the world. About a third of the fertile black earth soils are in Ukraine. The Ukrainian arable land corresponds to a good quarter of the area that exists in the entire EU. Food is Ukraine’s second most important export after iron and steel.
Last week, China lifted its import restrictions on wheat from Russia. According to this, wheat from all over Russia should be allowed to be imported into China in the future. Previously, this was only possible from seven Russian growing regions. Russian authorities had already announced in early February that China would allow imports of wheat and barley from all parts of Russia. A corresponding agreement was reached during President Vladimir Putin’s visit to China in early February.
Bread prices should ultimately also rise
In view of the rising world market prices for wheat, consumers in Germany must be prepared for the trend towards further increases in bread prices. However, the grain prices only play a subordinate role in the end price of the baked goods given the significantly higher personnel and production costs. They are estimated to be in the low single digits.