Global Grain Supplies at Risk as Russia-Ukraine Conflict Escalates

Grain exports from Russia and Ukraine are facing a renewed threat as the two countries expand their bombing targets. This has caught grain exports, especially those headed to the Mediterranean region, in the crossfire.

Russia accounts for a quarter of global wheat exports in a normal year, while Ukraine contributes another 10%. However, due to the ongoing conflict, Russian and Ukrainian grain exports have fallen significantly. Ukraine's exports were down by 20% in the first half of August compared to last year, while Russia's exports have dropped by half.

The price of wheat futures has surged by a quarter since July 1, reaching their highest levels since 2023. Other grains like corn and rice have also seen significant increases in price. 'Wheat, rice, corn, and barley are all relatively correlated,' said Matt Darragh, grains and oilseeds analyst at consultant Kpler.

Ukraine's President Volodymyr Zelensky offered a grain truce to his Russian counterpart Vladimir Putin, but Russia refused, citing the need to punish Ukraine. This has led to increased tensions and a higher risk of global supply disruptions.