Russia is the world’s third largest producer and largest exporter of wheat and Ukraine is one of the world’s top 5 exporters of wheat. As the two exporters face off against each other in this war, global demand has seen a sharp surge, especially in Middle East and North African (MENA) countries. Moreover, the planned expulsion of Russia from the SWIFT banking system is said to hamper the country’s exports even further.
Countries like Turkey and Ankara are exceedingly dependent on Russia and Ukraine for wheat. The futures of soft red winter-wheat leaped by 27% to $9.84 per bushel (highest since 2008) and hard red wheat crossed $10 per bushel. It is not just wheat, corn futures rallied up 22% and palm and soybean oil reached records. China and the European Union is highly dependent on the corn supplied by Ukraine. China was the smartest of all as it increased its wheat import from Russia by 20% as soon as Russia started threatening Ukraine.
Amidst the price rise, Indian wheat exporters have signed deals to export at least 5.5 lakh tons of wheat in the next 2 months. The demand for Indian wheat, corn and spices has shot up. Currently, all these commodities are seeing inflationary pressure as vendors are trying to export more of these commodities. If the government does not release enough grain into the market, local prices might shoot up and cause a serious inflationary pressure in the economy.
Highlight by Aman Agarwal.