The damaging effects of the ongoing war in Ukraine is not confined to the country. It will reportedly cause a sharp hike in food prices all over the world as both countries involved, Russia and Ukraine play an important role in the export of essentials to the cultivation of crops. Therefore, experts project that it will apply greater pressure on global trade.
Russia's attack on Ukraine has been a grave subject as the rampage continues to end lives and cause devastating damage to infrastructure. However, experts say the stock markets of both countries are not the only part of the economy to keep an eye on.
They foresee that the war will have devastating effects on the global food trade as both Russia and Ukraine are key shipments of some of the world’s staple crops.
Ukraine and Russia together account for more than a quarter of the global trade in wheat, as well as a fifth of corn sales. Port and railway closures in Ukraine, nicknamed the breadbasket of Europe, have already started to throw the nation’s commodity exports into chaos.
It’s not just the threats to grain shipments that could drive inflation. Russia is also a major low-cost exporter of a broad range of fertilizers. It’s hard to overstate how important fertilizer is to the food supply chain. If global trade gets disrupted, it will mean higher costs for farmers across the globe, and in turn, more food inflation.
Therefore, it's no surprise that the war has already caused sharp spikes in prices, with everything from wheat to corn to soybeans surging as the war continues. According to expert analysts, a war that would stop Ukrainian grain exports would likely drive wheat prices higher by another 30%, and corn by 20%.