In many ways, having a global marketplace is a good thing to be part of.
Partnerships usually make for a better, less volatile market and create stability as every member of a global food chain want it to work.
However when one of those global partners begins to behave in a negative way there are consequences for all global partners.
Russia’s invasion of Ukraine has sent economic ripples around the world when it comes to energy prices in North America and Europe, and at the same time it has had a negative affect on food prices and the availability of some farm produce.
Russia is the world’s third largest wheat exporter and Ukraine comes in as ninth place in the world wheat production. The United States comes in fourth and Canada comes in seventh. Russia and Ukraine exports when combined are expected to account for nearly 30 per cent of global wheat exports in 2021-22, according to data from the US Department of Agriculture.
Below is a list of countries and where they are in the list of wheat exporters as of 2020.
- Russia: $7.9 billion US (17.7% of total wheat exports)
- United States: $6.32 billion (14.1%)
- Canada: $6.3 billion (14.1%)
- France: $4.5 billion (10.1%)
- Ukraine: $3.6 billion (8%)
- Australia: $2.7 billion (6%)
- Argentina: $2.1 billion (4.7%)
- Germany: $2.1 billion (4.7%)
- Kazakhstan: $1.1 billion (2.5%)
- Poland: $1 billion (2.3%)
- Romania: $948.8 million (2.1%)
- Lithuania: $917.9 million (2%)
- Bulgaria: $698.7 million (1.6%)
- Latvia: $636.6 million (1.4%)
- Hungary: $621.1 million (1.4%)
War introduces an uncertainty factor rivaled by the weather, and that is reflected in increasing wheat prices.
In the United States wheat futures based on late February numbers rose to $1 US per bushel or around 13 per cent. In different US markets, that number fluctuated between 6 per cent and 12 per cent.
At the moment there is no news about a shortage of wheat exports around the affected areas involved in the Ukraine invasion, but fears that will happen over time have been slowly pushing prices up.
Earlier in the year, the Ukraine had been expected to produce at least 16 per cent of global corn exports. Naturally that number may now be off the table as they deal with their war effort.
Because Russia and Ukraine are both significant exporters of corn and wheat their war with each other will most likely affect their respective exports.
There is a very real concern about sea ports that need to be open in order to ship produce out to the world.
The Canadian Association of Petroleum Producers, said Canada imports roughly $550 million worth of crude oil a year from Russia, most of which is consumed in Eastern Canada. Consequently as food prices rise and exports fall short of expectations, the price of gas could continue to rise as will the cost of production for farmers.
That includes fertilizers which comes from all over the world.
Fertilizer prices are expected to rise after market concerns, that the Russia invasion may lead to a kink in global supplies of fertilizers.
Fertilizer prices are skyrocketing on concerns that Russia’s invasion of Ukraine will curtail global supplies.
Prices for some nitrogen fertilizer urea in New Orleans surged Thursday to $700 per short ton. Last week the same fertilizer was $560 a short ton in the same market
In 2021 Russia was one of the largest exporters of nitrogen products.
