War hits ‘granary of the world’ and Egypt and Turkey are the first to notice
The conflict between Russia and Ukraine, the world’s largest and fifth largest grain exporter, is creating uncertainty in the international market for wheat – a basic ingredient for bread. Russia is likely to be particularly affected by sanctions such as import bans and payment restrictions; the war on Ukrainian territory will affect crops and exports.
Ukraine and Russia send wheat around the world, but in grain, Egypt and Turkey are feeling the most direct effects of the conflict. Egypt, the world’s largest grain importer, gets more than 85 percent of its wheat from Russia and Ukraine. For number three, Turkey, that is 75 percent. Both countries are in any case highly economically dependent on Russia, which complicates the imposition of sanctions.
Besides Egypt, other African countries also import a lot of grain from Russia and Ukraine. There are no fears of shortages yet, according to the chief economist of the South African trade association for grain companies. For the time being, African countries can turn to other exporting countries.
Wheat price rises by more than a quarter, but not in Ukraine and Russia
The biggest fear regarding the grain supply right now is the increased price of wheat. In two weeks, the price of a tonne of wheat has risen by a quarter in many markets. The prices of Russian and Ukrainian grain are stable, but that is most likely due to a drop in demand. At the same time, there is more interest in wheat from Germany and France, where much of the Dutch grain comes from. American and Canadian prices have also risen sharply. In the Netherlands, a higher grain price does not easily lead to more expensive bread, because of agreements between sellers and industry. The concern is greater in African countries.