10.08.2022
Chicago 11, Melborne City, USA
Finance

Terrible geopolitical situation is fraught with turmoil in the wheat market – opinion

Consumed daily by billions of people around the world in the form of bread and other flour-based products, wheat is a staple food, making current record cereal prices a global problem. Low rainfall or drought in major producing countries was already a concern before the late-February armed conflict in Ukraine caused markets to surge. Since then, one of the world’s largest wheat exporters, Ukraine, has struggled to sow and then sell its crop, reports France-Presse (AFP) today, May 18.

Sebastian Abishead of the agricultural think tank Demeter in Paris and an expert at the Institute of International Relations (IFRI), told a French news agency what is “at stake”.

“Replacing wheat is very difficult. It is the most important cereal for global food security and is eaten by billions of people in the form of bread, flour or semolina. Corn is grown in large quantities, but is mainly used for animal feed or industrial purposes. In addition to its nutritional qualities, wheat is a very social and democratic product that allows people to produce inexpensive food, and it is often subsidized by the governments of many countries,” the analyst noted.

Wheat can be grown in temperate climates, but there are only a dozen countries that produce a lot of it and can export it, especially Russia, Ukraine, USA, Australia.

“In recent years, the United States is producing less and less because they are switching to corn and soybeans. After the Soviet period, the two countries that came forward were Ukraine and Russia. In recent years, Ukraine accounted for 12-13 percent of world exports,” he recalls.

Sebastian Abis states the “terrible geopolitical situation” that has led to unprecedented tensions in the world grain market. Added to this are “alarming climate events, with drought in the Southern Mediterranean basin, unrest in the United States and Europe.”

“India, which had an exceptional harvest last year and reserves that allowed it to sell more to foreign markets, has been hit by a terrible drought and will not be able to export. Prices that were high before the war are now skyrocketing, with wheat reaching 440 euros ($463) a ton on the Euronext market last Monday. India has announced a rather ambitious export target of 10 million tons. She sold about 3-3.5 million tons before she recently imposed an export ban, so one of the questions is whether she will fulfill her obligations, ”says an AFP source.

According to him, the situation is extremely tense, “because there is no country that could export more than usual.”

“Perhaps Russia will do this if it has a good harvest. But even if the war stops, Ukraine’s production and exports will not immediately recover. We have real long-term risks. We have not yet seen all the shocks, because in the world markets over the past two months we have been observing the fulfillment of contracts signed before the start of the conflict in Ukraine,” the French expert warns.

We currently have about 270 million tons for the entire planet, which consumes about 800 million a year. About half is in China, which has an annual consumption reserve. With the exception of China, grain inventories are at their lowest level in 25 years.

“We need international solidarity and cooperation. We cannot leave countries alone to fight for food security, but at the same time, it should not surprise you that some countries take care of themselves first. We need to produce wherever we can produce, especially in Africa. But for this we need peace and security,” concludes Abis.

A record harvest is expected in Russia in 2022, the grain harvest could reach 130 million tons, including 87 million tons of wheat, the President announced on May 12 Vladimir Putin at a meeting on economic issues.

“If this happens, and we will rely on this, then this will become a record in the entire history of Russia,” the head of state said then.

Such a harvest, according to Putin, will not only meet domestic needs, but also increase supplies to the world market.

As reported EADailyThe United States hopes India will lift its ban on wheat exports, Washington’s permanent representative to the UN said on May 16, warning that the move would exacerbate the global shortage of the strategic agricultural product.

The crisis over Ukraine has led to a sharp rise in food prices, causing a socio-economic shock in poorer countries that have already been hit hard by the Covid-19 pandemic. The UN has previously warned that “profound social tensions” are spreading, especially in North Africa and the Middle East.

administrator
Helped investors place more than 500 million rubles. and over $200,000 in stock market instruments. Developed over 60 investment strategies. Experience in Forex - Basic and Series 1.0. Broker-dealer activity. The purpose of creating the fx-guidance website is to share with you My knowledge, experience and transfer my best practices on the topic of INVESTING IN THE STOCK MARKET, so I want to start with a FREE technical analysis course, thanks to which you will receive:✅Basic technical analysis system used by prof. investors ✅Learn to find the perfect entry and exit points ✅Begin to see long-term trends on the chart and understand the likelihood of further price movement

    Leave feedback about this

    • Quality
    • Price
    • Service

    PROS

    +
    Add Field

    CONS

    +
    Add Field
    Choose Image
    Choose Video