The war happening in eastern Europe is ongoing, as of today. The conflict has officially entered its second month and repercussions are affecting major food markets globally. Ukraine and Russia are both leading producers of a number of food ingredients used by food producers. They supply a wealth of components that play key roles in food and beverage products such as wheat, corn (maize), and sunflower oil. Read on to learn more about the impact of Russia-Ukraine on commodities.
Together, Russia and Ukraine provide roughly 30% of the world’s wheat crop. The ongoing conflict in Ukraine will only lead to more shortages and price increases with the cease of exports from Ukrainian ports. Although the impact may take a little longer to be felt in markets producing their own wheat, such as in the U.S. and Canada, it is inevitable. The price for many types of wheat has already started to climb due to poor weather conditions in the U.S. As of March 7, 2022, wheat futures on the Chicago exchange were trading at their highest level since 2008, and global wheat prices continue to rise. It is very clear that prices for wheat around the globe will continue to spike. This will cause major impacts to a range of categories including bread, baked goods, cereal, pasta, and more.
Ukraine is also a major supplier of corn (maize). The country provides 16% of global corn (maize) exports, as well as 18% of the world’s barley. Major trade partners for Ukraine’s corn supply include Egypt, the Netherlands, and Spain. These countries will all feel the impact of an interrupted supply chain. According to Mintel GNPD, corn is used in roughly 25% of global food and drink launches, as well as in alcoholic beverages, sweeteners, starches, and corn oil derivatives that are integrated into other products. Prices in categories such as frozen and canned produce, breakfast cereals, and baked goods are going to be heavily impacted.
Ukraine is the world’s largest exporter of sunflower seed oil. Markets throughout the world are likely to be impacted by the absence of sunflower oil, one of the four major cooking oils utilized globally. Major EU markets including Germany, Belgium, and France are principal buyers of Ukrainian sunflower oil, as is the UK. Economists predict that the war, and the ensuing closure of Ukrainian ports, will lead to visible shortages at the retail level in as little as six weeks. And it is not just the cooking oil category that will feel the impact. Products across a range of categories, from cooking sauces to bakery goods and confectionery, include sunflower oil as an ingredient. According to Mintel GNPD, 20% of food and drink products launched in 2021 contained sunflower oil or other derivatives (eg lecithin and kernels). Furthermore, the war is also threatening Ukraine’s future sunflower harvests because farmers may struggle to even get seeds in the ground.
The anxiety that the conflict has caused, replaced the anxiety of COVID-19. Both companies and consumers are feeling price hikes and innovation is slowing down. Crop trade has come to a standstill, and we can only hope it ends soon.