Mounting conflict in the breadbasket of Europe is driving volatility in wheat markets, the Wall Street Journal reports. Russia and Ukraine account for 29% of global wheat exports, and wheat futures are rising on the threat of war and the potential for Western sanctions on Russian exports, the WSJ notes.
Ports in both nations are key gateways for grain exports to buyers in North Africa and the Middle East, and damage to port infrastructure or disruption to shipments could snarl supplies for countries that depend on imports to keep their populations fed. Ukraine’s key wheat-growing regions also lie close to Russian-held territory. The risks are pushing wheat futures traded in Chicago up to nearly $8 a bushel.
Other major wheat growers like the U.S., France or Australia could use any disruption to expand their share of the export market.
U.S. Secretary of State Antony Blinken will speak by phone with Russian Foreign Minister Sergei Lavrov following U.S. proposals on de-escalating the situation. Russia still denies it plans an invasion, while western allies are finalizing a package of sanctions that could be imposed in case diplomatic efforts fail. The U.S. and U.K. plan to target Russian oligarchs and businesses connected to the Kremlin as part of a broad sanctions effort if Russia invades Ukraine.
Importance of Agriculture
Just last week, AgWeb reported on what the Ukraine-Russia tensions could for global agriculture. As shown below, Ukraine is a key player in global agriculture, and how these conflicts play out will have international impacts. Ukraine has more than 41.5 million hectares (or 102.5 million acres) of agricultural land that cover 70% of the country.
In 2020, Ukraine’s agriculture sector generated approximately 9.3% of GDP. Crop farming, which accounts for 73% of agricultural output, dominates Ukrainian agriculture, according to the International Trade Administration.
