Since the eruption of the Russian-Ukrainian tensions, fears have emerged that the global wheat and grain markets will be severely affected, given that the two countries secure an important part of global exports.
Russia and Ukraine account for 29% of world wheat exports, 19% of corn exports, and 80% of global exports of sunflower oil.
Since the launch of Russia's invasion against Ukraine on Thursday, wheat prices on the Chicago Stock Exchange have risen to their highest level in nine and a half years, while the conflict threatens to disrupt the flow of supplies from the region.
Meanwhile, European wheat futures jumped to a record peak, and wheat prices reached 344 euros per ton at the Euronext group, which operates a number of European stock exchanges.
Ukraine is a major exporter of corn, most of which goes to China and the European Union. Russia is also competing in supplying wheat to major buyers, such as Egypt and Turkey.
An adviser to the Ukrainian president’s chief aide said the army suspended commercial shipping in Ukrainian ports after Russian forces invaded the country, fueling fears of supply disruption.
Officials and sources in the grain sector had previously said Russia also indefinitely suspended the movement of commercial ships in the Azov Sea, but kept its ports on the Black Sea open to navigation.
In the midst of this political dilemma, the countries of the Middle East, mainly Egypt, Lebanon, Iraq and the Maghreb countries, are threatened with a serious problem, as their major reliance on Ukrainian and Russian wheat would be difficult to compensate from other markets.
Lebanon faces a severe crisis
Lebanon had lost its grain storage capacity since the massive explosion that rocked the port of Beirut in August 2020 and destroyed the wheat silos.
On Friday, Lebanese Economy Minister Amin Salam told Reuters that wheat reserves were sufficient for one month at most, adding that he was seeking to conclude import agreements from different countries amid market concerns over the Ukrainian crisis.
He added that Lebanon, which imports nearly 60% of its wheat from Ukraine, was in talks with other countries including the United States and India to import wheat.
“We don’t want to create a state of panic, we have positive indicators,” the minister told Reuters.
Earlier on Friday, Georges Berbari, the ministry’s general director of grains and sugar beets, told Reuters that Lebanon’s wheat reserves were enough for 1.5-2 months.
Two wheat shipments headed for Lebanon were being loaded in Ukraine, but they have been delayed by the war, he revealed.
Distress call from Yemen
The World Food Program (WFP) warned on Thursday that the war in Ukraine would likely increase fuel and food prices in war-torn Yemen, which could push more residents into starvation as aid funding dwindles.
The WFP has had to cut food rations for eight million people in Yemen, as the seven-year war between the government and the Iran-backed Houthi militias has pushed the country to the brink of famine.
“The escalation of conflict in Ukraine is likely to further increase fuel and food prices and especially grains in the import-dependent country,” said a WFP statement on Thursday.
It added: “Food prices have more than doubled across much of Yemen over the past year, leaving more than half of the country in need of food assistance.”
“We have no choice but to take food from the hungry to feed the starving and, unless we receive immediate funding, in a few weeks we risk not even being able to feed the starving,” the WFP statement cited WFP Executive Director David Beasley as saying.
“This will be hell on earth,” he warned.
A daunting task
In Egypt, the most populous Arab state and the world’s biggest importer of wheat, the authorities will scramble to find urgent alternatives to feed 100 million citizens, with the country importing about 40% of its needs from Russia and Ukraine.
However, multi-pronged moves are likely to solve the crisis, including the local expansion of wheat cultivations and diversification of imports, in addition to having reasonable reserves that are enough for six months.
Moreover, the country’s local production is sufficient to produce daily bread, Dr. Saad Nassar, economist and advisor to the Egyptian Ministry of Agriculture, told Asharq Al-Awsat.
Egypt’s state grains buyer, the General Authority for Supply Commodities (GASC), cancelled its international purchasing tender on Thursday because of a lack of offers. The Authority received one offer at $399 a ton for 60,000 tons of French wheat on a free-on-board (FOB) basis in its international tender on Thursday, traders said.
Reassuring messages
In Tunisia, the Ministry of Agriculture revealed the availability of sufficient grain stock to cover local needs until next May.
Abdel Sattar Fihri, Director of Supply at the Grain Office, said that about 80% of Tunisia’s grain imports came from Russia and Ukraine, which necessitates taking precautionary measures as the crisis could last long and impact shipments.
He added that the Ministry of Agriculture had ordered a search for other markets, such as Bulgaria, Romania, Uruguay and Argentina, for new bid requests, and to avoid Russia and Ukraine during this period.
Similarly, a spokesman for the Iraqi Ministry of Trade said on Thursday that his country has a sufficient strategic stock of wheat from its purchases from local farmers, adding that he was not worried about reserves. But he added that Iraq might resort to the market to buy wheat if the crisis between Russia and Ukraine is prolonged.
