By Tom Williams
Ukraine is considered the “breadbasket of Europe,” and the Russian invasion is choking off grain exports, sending global food prices to record highs.
Grain prices surged to record highs last week as world food prices are now higher than they were during the 2011 Arab Spring, leaving us with an abundance of caution that political uprisings due to food price shocks could be right around the corner. See the chart below and learn more here.
Taking out both Russian and Ukrainian grain markets will have global effects. Over the past 30 years, the Black Sea region has emerged as an important global supplier of grains and oilseeds, including vegetable oils. In the early 1990s, following the breakup of the former Soviet Union, the region was a net importer of grain.
Today, Russia and Ukraine exports account for about 12% of total calories traded in the world, and the two countries are among the top five global exporters for many important kinds of cereal and oilseeds, including wheat, barley, sunflowers, and maize. Ukraine is also an important source of sunflower seed oil, supplying about 50% of the global market. See this in the chart below and learn more here.
Today, Russia ships more than 18 percent of the world’s supply of wheat, followed by the US (16 percent), Canada (14 percent), France (10 percent), and Ukraine (seven percent). See this in the chart below and learn more here.
To understand the most vulnerable countries to food price shocks and shortages, because of the Ukrainian crisis, Bloomberg data shows the most reliant countries on Ukrainian wheat. These include; Egypt, Indonesia, Bangladesh, Pakistan, and Turkey. See this in the chart below.
Here in the chart below is a broader view of the Russian and Ukrainian wheat markets and where these wheat exports go across the globe.
Notice that the receiving countries of this wheat are in the developing world, though global wheat prices are somewhat fungible and will affect much of the Western world. See here US wheat prices that are currently skyrocketing.
In early 2011, the world witnessed an unprecedented wave of political uprisings in the Middle East known as the Arab Spring – protesters marched from Tunisia to Egypt to Yemen demanding the toppling of their regimes along with freedom, equality, and bread.
The obvious reasons that ignited the uprisings across the Middle East include high levels of corruption, police brutality, no real political freedoms, low levels of income along with high-income inequality, high levels of youth unemployment, and last and least authoritarian regimes.
However, there was one factor unnoticed that had a global impact but affected the Middle East the most – food Prices, more specifically, the rising price of grain. This brings us to a question. If this Ukrainian crisis continues, will the conflict see further contagion across the globe due to higher grain prices?
What could go wrong?
See more Chart of the Day posts.
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RWR original article syndication source.
Source: Chart of the Day: Ukrainian Crisis Set to Spread Chaos Globally as Wheat and Food Markets Soar
Category: Economy, International, RWR, Chart of the Day, Food Riots, Russia, Russian Sanctions, Ukraine, wheat
