International grain markets already rattled by the COVID-19 pandemic may become even more unstable in the coming months as the threat of war between Russia and Ukraine looms.
Russia is the world’s largest exporter of wheat and Ukraine is the fourth largest, according to data from the U.S. Department of Agriculture (USDA). The two nations account for 29 percent of global wheat exports and the nearby Black Sea serves as a major shipping conduit for grain to Europe, Asia and Africa.
As of Feb. 10, the weighted average farm price for all wheat in the U.S. was $7.30 per bushel — up from $5.05 in 2021 and $4.58 the year before.
Prices in Europe have increased as well. Some experts worry that a Russian invasion of a country known as Europe’s breadbasket, and potential Western sanctions, will add to supply chain challenges brought on by the pandemic and inflate global food prices, which could drive bread and other grain products prices even higher.
“So much of our production is dependent on the export market so when something disrupts the flow to one export market, there are ripples,” said Ernest “Rusty” Lee, agronomist with the University of Missouri Extension in Montgomery County. “So, that would be the question: How big an impact will that have?”
According to the United Nations’ Food and Agriculture Organization Food Price Index, the price of breakfast cereals is the highest it’s been since 2011. If American producers are expected to export where Ukraine or Russia can’t, the price of consumer goods in the U.S. could continue to rise.
The militarization around Ukraine will have lasting effects on the international grain market, according to Pat Westhoff, director of the University of Missouri’s Food and Agriculture Policy Research Institute. Westhoff said he isn’t exactly sure how it will affect Missourians, or for how long, but a broader scale conflict could cause years-long impacts, stretching into future crop seasons. He said it’s impossible to forecast how much food prices may rise, but with input costs to farmers like petroleum products and fertilizer also increasing, the result could be shocking and not just limited to grain products. Cattle, hogs and chickens all eat grain, so meat prices would increase too.
Milling & Baking News reported the average price per pound for white bread baked in a loaf pan in the U.S. increased 1.5 cents in January, up 0.6 cents from 2021. The national average price for whole wheat bread increased 1 cents from December to January and the price of flour was up 9.3 cents, to 42.4 cents per pound.
Still, Westhoff said weather continues to have the biggest effect on agriculture prices, though “Russia is getting pretty close to the top of the list now.”
War is also not guaranteed. Some experts say it could be avoided, and the possibility remains that even if Russia invades Ukraine, little disruption may occur. In 2014, when Russia invaded Crimea, it didn’t create much of an interruption in trade flow out of Russia or Ukraine. Wheat prices increased 25 percent, but according to the Wall Street Journal, settled soon after the invasion.
Lee said farmers are trying to stay upbeat with the situation.
“Farmers are pessimistically optimistic,” he said. “Optimism always wins out in production ag, or else producers wouldn’t put the seed in the ground next year. … There is so much uncertainty, whether it be government regulation, whether it be the weather, whether it be pest, disease, and now we’re in this global, international market economy, nobody knows what the heck is going on.”
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