Impacts of Ukraine-Russia Conflict on Global Grain Prices

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Impacts of Ukraine-Russia Conflict on Global Grain Prices
Global grain prices, which rose after the second half of 2020, expedited the speed amid the protracted war in Ukraine, mainly triggered by price surges in wheat, maize, and barley, which are the Black Sea region’s major exports.• The Chicago Board of Trade (CBOT) futures prices of wheat, maize, and soybeans in March 2022 rose by 137.7%, 102.1%, and 72.0% compared with the average March prices. Concerns about grain export decrease in the Black Sea region due to the war and major grain exporters’ restriction on outbound shipments caused the rise.Ukraine and Russia are one of the largest producers and exporters of maize, wheat, and sunflower oil. • Ukraine’s shares in the international grain trade amount to 14% for maize, 9% for wheat, 10% for barley, and 43% for sunflower oil. Russia takes a 20% share for wheat, 14% for barley, and 20% for sunflower oil. The grains from the Black Sea region are mostly shipped to Europe, the Middle East, Southeast Asia, and China. Russia’s war on Ukraine will likely raise wheat and maize prices by 10-20% in 2022/23. If the conflict continues longer than expected, price hikes will keep up.• The region’s wheat and maize exports will likely decrease by 7 million tons and 6 million tons in 2021/22. Meanwhile, Ukraine’s spring crop output and cultivation areas for summer crops will shrink by 30% each. South Korea highly depends on maize for processing (including non-GMO maize) and feed wheat exported from the Black Sea region. Although the nation can find replacements in other countries, upward pressures on domestic prices will be unavoidable.• Korea relies on imported grains for assorted feed and food manufacturing. As a result, international supply bottlenecks and following price volatilities affect production activities in domestic industries such as feed and food processing, livestock production, and restaurants. • Russia’s invasion of Ukraine drove up consumer prices of processed foods by 3.4-6.8%, dine-out services by 0.6-1.2%, and producer prices of animal feed by 5.3-10.6%. In the short term, the government must develop replacement sources and extend financial and tax aid to minimize impacts on domestic prices. In the long term, it should expand domestic output bases, including grain stockpiling, and help domestic grain distributors enter the international distribution market to set up the nation’s procurement platform. • As grain prices surged amid the conflict in the Black Sea region after their rise in the second half of 2020, the government activated a response system led by the grain policy committee to tackle challenges from international price surges.
1. Global grain markets2. Grain exports of Ukraine and Russia3. Analysis of impacts on global grain markets4. Analysis of impacts on Korea5. Key findings and countermeasures
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