Afrasianet - Counter-attacks between Russia and Ukraine have pushed wheat prices to their highest levels in nearly three years, amid growing concerns about the safety of export ports and the ability of the two countries to continue supplying global markets.
Wheat futures on the Chicago Stock Exchange ended last week up more than 3% at $7.84 a bushel, equivalent to about $287 a tonne.
Wheat prices jumped more than 12% last week, their biggest weekly rise in nearly four years, as concerns mounted over grain supplies from the Black Sea region. Since the start of the year, wheat futures have risen by about 54%, amid increasing risks to grain exports from Russia and Ukraine, which are among the largest wheat suppliers on global markets.
The Black Sea.. The Global Grain Artery
Developments in the Black Sea region are particularly important for global markets, as they include ports used to ship a large proportion of Ukraine's wheat, corn and sunflower seed exports, while Russia and Ukraine together account for about a quarter of global wheat exports.
Dr. Nader Noureddine, a professor at the Faculty of Agriculture at Cairo University and an expert in global grain exchanges, says that the importance of the region goes beyond wheat, pointing out that Russia and Ukraine control about 34% of the total grain exports globally, including wheat, yellow corn, and barley.
The region also accounts for about 77% of sunflower oil exports, as well as about 30% of soybean or soybean oils, which are mainly used in the feed industry and the production of poultry, meat and fish, Noureddine said.
Any damage to this main source of supply is reflected in global food markets, he said, noting that the total global trade in wheat ranges between 210 and 220 million tonnes per year.
Sharp decline in Russian and Ukrainian shipments
The report estimates that Russian wheat shipments fell by more than half this month compared to levels a year ago, while Ukrainian grain exports fell by about 75% during the first half of the month year-on-year.
This comes at a time when the exports of the two countries are facing increasing challenges due to risks surrounding infrastructure, ports and shipping routes in the Black Sea. Noureddine warns that the expansion of targeting infrastructure related to the grain trade could threaten more exporting countries, noting that Kazakhstan, for example, is a locked country that relies on Russian ports to export part of its grain, which also makes it vulnerable to the repercussions of disrupted navigation in the region.
More than 55 million tons of Russian exports
The data of the report shows that Russia's wheat exports have witnessed significant fluctuations since the outbreak of the war in February 2022. Russian wheat exports reached about 33 million tons in 2022, before rising to 45 million tons the following season, despite Western economic sanctions. These exports include what Russia has been providing to some African countries for free and in the form of donations.
In the agricultural season that ended in 2024, Russian exports recorded a record level of more than 55.5 million tons, but this trajectory did not continue last year, as exports fell to about 42 million tonnes, amid a drop in production and renewed export restrictions.
As for Ukraine, data from the Food and Agriculture Organization of the United Nations (FAO) indicate that its wheat exports also trended down. After reaching about 19 million tonnes in 2022, it fell to 17 million tonnes the following season, affected by transport and export disruptions and damage to agricultural infrastructure.
Exports improved slightly in 2024 to about 18 million tonnes, before falling significantly last year to about 14 million tonnes, as the war's repercussions on export ports and supply chains widened.
Alternatives are further and the bill is higher
With the disruption of supplies from the Black Sea, importers have begun to look for alternatives from farther afield, such as Australia, Argentina, Canada and the United States, which raises shipping and transportation costs and adds new pressures on food prices. Dr. Nader Noureddine believes that the problem is not only related to the high price of wheat, but also to the high cost of transporting it to imported markets.
He explained that Arab countries are heavily dependent on grain imports from the Black Sea region, pointing out that about 65% of the Arab countries' grain needs come from this region, according to his estimates, with a value of about $75 billion annually.
He pointed out that the proximity of the Black Sea to Arab markets gives its imports an important advantage compared to distant origins, as sea trips from America and Canada take about 24 days, and from Argentina about 28 days, which means that the cost of transportation is high when resorting to these alternatives.
As for Australia, Noureddine points out that it is one of the closest major alternatives, but it takes about 7 to 10 days to transport wheat from there to the region, and Australian wheat prices may be higher than those traded on international exchanges. He said French wheat is another alternative, but it faces challenges related to high humidity, while Romania and Hungary can contribute limited quantities, up to about 5 million tonnes each, according to his estimates.
Energy & Insurance
The repercussions of the war do not stop at port disruptions or reduced exports, as grain prices are also linked to energy, shipping and insurance costs. Noureddine says the relationship between energy prices and food prices is close, as grain transports depend on fuel-powered ships, and the production of fertilizers, pesticides and growth regulators requires large amounts of energy.
As the Black Sea becomes a high-risk area, so do the costs of insuring shipments, as well as the risk premium imposed by carriers due to the potential for attacks on ships or infrastructure. The expert on global grain exchanges gave an example of this by pointing to the vulnerability of ships loaded with food to damage in the Black Sea, considering that the targeting of food ships could have direct repercussions on importing countries.
$285 per ton
Noureddine says that at the beginning of the year, the price of a ton of wheat was around $250, before now approaching $285, which represents a significant increase in the cost of the basic commodity, with a similar rise in the price of yellow corn.
As attacks on ports and infrastructure continue in the Black Sea region, global markets face a difficult equation: less supplies from one of the most important grain sources, more distant and more expensive alternatives, and rising energy, insurance, and transportation costs.
For Arab countries that are heavily dependent on grain imports, the continued Black Sea turmoil could mean a higher food bill, at a time when there are growing fears that the wheat price shock could be transferred to other food products that depend on it or grains and fodder for their production.
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