Zurich Although the dispute over the blockade of Ukrainian wheat deliveries is still unresolved, food prices on the global commodity markets have eased somewhat recently. The price of wheat on the Chicago futures exchange has fallen by 20 percent in the past four weeks alone. Since the all-time high at the end of March, the minus has even been around 35 percent.
Experts like Warren Patterson, analyst at Bank ING, attribute this to the weak prospects for the global economy. This depends on the demand. The US export data shows, for example, that the demand for wheat on the world market is declining.
In addition, Ukraine is doing better than feared in exporting wheat. According to the Ukrainian Ministry of Agriculture, exports in the first week of July, the start of the 2022/2023 crop year, were 40 percent below the previous year. But the major crop failures feared at the beginning of the Ukraine war did not occur.
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Recently, the US agricultural agency USDA revised its forecasts for global wheat stocks slightly upwards. These factors ensure some relaxation on the commodity markets – even if ING expert Patterson restricts with regard to the faltering exports from Ukraine: “Higher inventories do not necessarily mean higher availability.”
Consumer prices remain high
The struggle for Ukrainian grain exports therefore continues unabated. And the famines are increasing. At the G20 summit last week, US Secretary of State Antony Blinken blamed Russia for the current food crisis. He urged the Russian delegation to lift the blockade of Ukrainian ports and allow grain exports by ship.
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“Unfortunately, many of the challenges facing the world that are affecting people’s lives, particularly around food and energy, have been dramatically exacerbated by Russia’s aggression against Ukraine,” Blinken said. Currently, Ukraine exports agricultural commodities mainly by rail across the country’s western border.
Meanwhile, Turkish President Recep Tayyip Erdogan is positioning himself as a mediator in the stalemate. His country is currently working to get the United Nations, Russia and Ukraine to the negotiating table to negotiate a corridor for food exports across the Black Sea. Erdogan recently said his country has around 20 ships in the region ready to transport Ukrainian wheat once a compromise is negotiated. “We will try to transport these products and re-export them to third countries,” Erdogan said.
Welthungerhilfe report is alarming
Turkey is also investigating allegations by Ukrainians that Russia is stealing Ukrainian wheat. The focus is on a freighter with 7,000 tons of wheat, anchored in front of the Turkish Black Sea port of Karasu. The ship had previously been in the port of Berdyansk, a Ukrainian port city currently under Russian occupation.
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A report by Welthungerhilfe published on Tuesday shows how important it is to resolve the dispute over the Russian blockade of food exports. According to this, 828 million people are already suffering from hunger.
This largely coincides with the figures published by the UN: It assumes that around 770 million people are undernourished worldwide – i.e. people who have not received enough food for a year. This corresponds to an increase of six percent compared to the previous year. Welthungerhilfe President Marlehn Thieme warned on Tuesday: “The Russian war of aggression against Ukraine is acting like a renewed fire accelerator.”
“Over the remainder of the year, I expect prices to fall slightly, but not sharply enough to impact retail prices.” Upali Galketi Aratchilage, economist at the Food and Agriculture Organization of the United Nations
Food prices had already risen sharply after the corona pandemic, by an average of 28 percent in 2021. There is hardly any improvement in sight, says Upali Galketi Aratchilage, economist at the Food and Agriculture Organization of the United Nations (FAO): “Expect for the rest of the year I think prices will fall slightly, but not sharply enough to impact retail prices.”
According to initial estimates, this could ultimately mean that 50 million more people in the world would go hungry. However, according to Welthungerhilfe boss Thieme, this number should be treated with great caution: “Because we don’t yet know how the markets will react.” It is unclear, for example, whether China and Brazil are exporting grain and food to the required extent. And so the poker game for the urgently needed Ukrainian grain deliveries should continue.
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