Food security threatened by grain disruptions

 

The Russian invasion of Ukraine in early 2022 caused wheat and corn prices to spike 30% and 13%, respectively, and threatened a worldwide food crisis. International efforts to mitigate a food security crisis via the Solidarity Lanes and the Black Sea Grain Initiative (BSGI) have successfully allowed grain exports out of Ukraine.

However, Russia’s recent withdrawal from the BSGI, coupled with increased bombings of Odesa and Danube River ports, caused another price spike for these grains. Further aggression in the region risks halting Russian wheat and Ukrainian corn exports across the Black Sea, the main export channel for both countries.

Russia accounts for about 18% of global wheat exports and 2% of worldwide corn exports, while Ukraine provides 15% of global corn exports and only 9% of wheat. Why have these statistics spooked the grain commodity markets?

"The simple answer is that Russia’s aggression in the Black Sea region increases the risk of the world grain market losing the number four corn exporter, Ukraine, and the number one wheat exporter, Russia, if grain vessels on the Black Sea become targets of drone strikes," said Colin A. Carter, Distinguished Professor of Agricultural and Resource Economics at the University of California, Davis.

If all grain shipped through the Black Sea by Russia and Ukraine were halted, it would cut off 27% of global wheat exports and 17% of global corn exports...more