Russia’s invasion of Ukraine in February 2022 caused an immediate disruption in the global wheat market, with serious implications for food prices and global food security. Wheat is a staple commodity in many countries and one of the most extensively traded crops worldwide. A new paper from the University of Illinois Urbana-Champaign and Texas Tech University examines the long-term impacts of the war in Ukraine on global wheat prices and market responses.
“We present a comprehensive, holistic picture of the global wheat market. Our analysis looks at export-import linkages between individual countries to evaluate how trade and prices have adjusted,” said co-author William Ridley, assistant professor in the Department of Agricultural and Consumer Economics, part of the College of Agricultural, Consumer and Environmental Sciences (ACES) at U. of I.
“At the start of the invasion, everybody was really concerned there was going to be an explosion in wheat prices. We did see a massive spike in prices, but eventually, the market adjusted and price impacts leveled out,” he added.
Global wheat prices jumped by 28% in the early phases of the war, but within a few months, they began to decrease, although they remain 2-3% higher than before the invasion.
Price increases of 2-3% may not seem like a lot, but it comes on top of ongoing global inflation, and it contributes to worsening food insecurity in many poor countries that are already suffering from high prices and inadequate supply of staple foods, Ridley said.
Wheat is grown in at least 97 countries around the world, according to Ridley. But some of the major producers, including China and India, primarily grow for domestic consumption and only a handful of countries supply most of the global market. Ukraine is the world’s ninth-largest wheat producer and fifth-largest exporter, with the majority of exports going to Africa, Asia, and the Middle East.
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Categories: Illinois, Crops, Wheat