Wheat prices have been climbing on global markets, just days after Russia pulled out of an agreement that guaranteed safe passage for ships carrying cereals through the Black Sea, reigniting fears of the impact on poorer, grain-importing countries, as well as on western nations dealing with stubbornly high inflation.
Russia has carried out heavy air strikes on Ukraine’s grain stores, as well as port infrastructure in the coastal city of Odesa after the Kremlin’s decision to terminate the UN-brokered Black Sea grain initiative between Russia and Ukraine.
Grain prices had fallen by more than a third (35%) under the deal, which had been in place for just under a year in an attempt to alleviate a food crisis prompted by Russia’s blockade of Ukrainian ports that had prevented the transport of millions of tonnes of vital cereals.
Wheat was trading almost 1.5% higher on the Chicago Board of Trade exchange on Thursday morning, while corn and soya bean prices were also rising. It followed a rise of more than 8% in wheat prices on Wednesday.
Around the world, prices for other agricultural commodities such as rapeseed and sugar have also been climbing.
Ukraine is a large producer of grains and oilseeds, and has previously been the world’s fifth-largest exporter of wheat. Russia is also a large wheat exporter.
Moscow has warned it would consider all ships sailing in the Black Sea region to Ukrainian ports to be potential military targets.
On Thursday, European Union’s foreign policy chief accused Russia of provoking a global food supply crisis.
“What we already know is that this is going to create a big and huge food crisis in the world,” Josep Borrell said before an EU foreign ministers’ meeting.
The UN secretary general, António Guterres, has previously warned that hundreds of millions of people would face hunger as a result.
Before the suspension of the grain deal, prices for wheat had fallen by about 14% since January, while corn prices were more than 20% lower.
The renewed rise in commodity futures has led to concerns that the price of essential ingredients could surge, just as food inflation has started to ease in the UK and other western countries.
Susannah Streeter, the head of money and markets at the broker Hargreaves Lansdown, said: “Although its highly disappointing for western shoppers, dealing with prices increases at the tills, [Russia’s] move is treacherous for countries grappling with severe drought, particularly in the horn of Africa, where millions of people are at risk of acute food insecurity and famine.”
Analysts have also pointed out that other key growing regions including in the US have been hit by unusually hot weather and lack of rain. This has led to a reduction in forecasts for the US wheat harvest, with stocks estimated to fall to a 16-year low.
Streeter said: “This highly unwelcome collision of factors has pushed up US wheat futures prices by more than 13% since Tuesday, adding to concerns that food prices will remain very sticky.”
