Prices for corn go off scale, wheat renews monthly highs. Deliveries from Ukraine are intermittent. Meanw-hile, fertilizer stocks in Europe are running low due to anti-Russian sanctions, which threatens crop failure. The UN is sounding the alarm – more than one-fifth of humanity is waiting for hunger and poverty.
At the maximum
Chicago corn futures topped eight dollars a bushel (a box of 38.6 kilograms), a ten-year high. In September 2012, a drought destroyed crops in the US Midwest.
Now cereals are becoming more expensive due to military operations in Ukraine. Logistic chains were broken there, most Ukrainian seaports are closed, they are transported by rail. But the volume of deliveries of agricultural products is several times less than by sea.
Ukraine is the fourth largest supplier of corn in the world. Last year, the country shipped about 23 million tons. “Approximately 55 percent of exports go to the EU. About 30 more go to China and South Korea. The remaining small amount goes to other states,” says Yaroslav Ostrovsky, a specialist in TotalResearch’s strategic research department.
Sowing is under threat. Farmers can’t start work – there is not enough fuel, seeds and fertilizers. Due to broken logistics, they do not even receive paid goods.
The grain harvest in Ukraine may fall by 35 percent to 27.7 million tons, SovEcon warns. “It is simply impossible to replace such a volume of supplies to the world market. Hence the sharp rise in futures for culture,” the expert continues. Pushing up quotes and cold weather in four of the five corn states of America. With a delay, farmers from Iowa, Illinois, Minnesota and Indiana entered the fields. In Nebraska, only two percent of the area was planted.
The slow start of the sowing campaign made the market nervous. Everyone fears a shortage of agricultural crops, which is frau-ght with rising food prices.
Meanwhile, wheat, another main export commodity of Ukraine, is getting more expensive. Before the hostilities, the country was the second largest supplier of grain to the EU and one of the largest to the emerging markets of Asia and Africa.
This year’s wheat crop c-ould reach 16.7 million to-ns, about half of last year’s output, Ukrainian company Barvainvest warns.
The country and other cultures will be missing. Sunflower will be harvested 30-40 percent below the norm, agricultural holding Maxigrain predicts.
According to the profile portal APK-Inform, the total production of grain and oilseeds will be reduced by half – to 53.3 million tons.
Such disappointing forecasts threaten a shortage of basic products in the world and rising prices, which are already breaking records.
In the US, annual inflation accelerated to 8.5 percent in March. This hasn’t happened since the 80s. The rate is off the scale in Europe. In 19 states – seven and a half percent, calculated Eurostat. Most of all – in Lithuania: inflation there was 15.6. In Germany – 7.3: this is the maximum over the past 40 years.
Problems will not bypass developing countries. “The crisis could plunge up to 1.7 billion people, more than one-fifth of humanity, into poverty. Hunger on a scale the world has not seen for decades,” UN Secretary-General António Guterres wrote in the Czech edition of Seznam Zpravys.
In the 21st century, the world has experienced ma-ny clashes – in Afghanistan, Iran, Yemen, Libya, Syria. But it is the military operations in Ukraine that suffer such large-scale losses, the UN notes.
Russia and Ukraine are key exporters of agricultural products. First of all wheat. Together they provide 30 percent of the world’s supply of this crop. It is difficult to replace it: every third person on the planet eats bread.
In addition, the two co-untries account for 55 percent of sunflower oil expo-rts. Supply disruption is fraught with global shortages.
The situation is aggravated by sanctions that do not allow supporting agricultural production. The EU has refused fertilizers from Russia, despite the fact that the country is in the top three suppliers of urea, ammonia, ammonium nitrate, which are critical for agriculture. But this did not prevent the European Union from restricting imports. Now they expect a harvest half as much.
And there is nowhere to turn – everyone is trying to leave as much as possible for themselves. For example, the Chinese have stated that they are not going to dump part of their reserves on the European market. China, on the contrary, is working in reserve: increasing purchases to ensure food security. Sri Lanka has completely defaulted, India is helping to cope with the economic crisis.
Meanwhile, grain is not only bread and pasta. The lion’s share goes to feed for livestock. Likewise with corn.
At one time, the meat industry almost disappeared in Russia. There was nothing to feed the cows, every autumn the animals were put under the knife.
Keeps on grain and corn and poultry farming. Ther-efore, when these crops rise in price, the prices for meat and milk soar.
“States will suffer not only in Europe, but also in North Africa. Especially Egypt, which for a long time was one of the main importers of food from Russia and Ukraine,” notes Yaroslav Ostrovsky.
Developed and developing countries will have to tighten their belts, analysts warn.
French LeFigaro recalls: the problem with wheat in 2007 provoked food riots in 37 countries. Everything resulted in the “Arab spring”. But then the culture cost 240 euros per ton. Now – over 400. And this is not the limit.
Add fuel to the fire and sanctions against Russian hydrocarbons. The Americans in March abandoned Russian oil and gas, European countries are trying to follow the same course. They are looking for new suppliers, because of this, the demand for energy resources is growing, prices are accelerating.
In Latin America, there are already mass protests. In Peru, a liter of gasoline has risen in price by 37 percent, Uruguay – by 33, Brazil – by 26, in Argentina and Chile – by 15 and ten.
As a result, the cost of transportation rises, and the costs of producers increase. Hence the acceleration of inflation. All this complicates the recovery of the global economy, which never recovered from COVID-19.
Playing back the situation will not work, analysts say. Processes are running. Everyone will suffer. A good harvest is predicted in Russia – the country will provide for itself. However, the sanctions have changed the rules of the game: it is necessary to build a new economic model, to look for alternative markets. And it will be another reality.