Wheat Soars To 14-year High Over Supply Fears, Russia And Ukraine Control Nearly 30% Of Wheat Export Market

Global prices for wheat reached multi-year highs today (March 3), as war between major exporters Russia and Ukraine continued to raise concerns about the global supply of the commodity.

Chicago wheat futures have climbed to 14-year highs of $11.34 a bushel, and are up nearly 40% this month.

Russia is the world’s largest exporter of wheat, accounting for over 18% of international exports. Together with Ukraine, which has also stopped shipping grain, the two countries supply about 30% of global wheat supplies. The crisis threatens to push food prices across the world to an all-time high.

Of the 207 million ton international wheat trade, 17% comes from Russia and 12% comes from Ukraine, according to one estimate by Bank of America.

Russia is estimated sold 38.5 million mt of wheat in 2020-21, according to data from the US Department of Agriculture.

Port Blockage

The Black Sea is a key geo-economic region for Russia and Ukraine. Both nations rely heavily on the ports in this region for agricultural and industrial exports.

The wheat and grain flows is likely to be affected, as 95 percent of Ukraine’s wheat exports were transported via the Black Sea in 2020. Odesa, Kherson and Mykolaiv are key ports for international trade flows.

The stoppage of grain exports out of Ukraine was confirmed on Monday as the country said all ports will be closed until the end of the Russian invasion.

Most Ukrainian and Russian Black Sea and Azov Sea ports remained closed this week, though Russia’s large grain export port Novorossiysk is operational.

Grain exporters now need to scout for alternative sources of wheat and corn as the Russian invasion cuts off Ukrainian supplies.

Countries like Egypt and Turkey are hugely dependent on wheat imports from Russia and Ukraine

Egypt is the world’s biggest importer of wheat. It spends more than $4 billion annually to feed its population of over 100 million. Russia and Ukraine imports meet more than 70 percent of Egypt’s wheat demand.

Turkey is also a big spender on Russian and Ukrainian wheat with 74 percent of its imports worth $1.6 billion coming from those two countries in 2019.