High fuel and grain prices expected after Russia invaded Ukraine

Oil price (Brent) hit US$102/barrel on the back of Russia’s military actions on Thursday, February 24, 2022.

The increase in the price of fuel is seen as detrimental to a global economy that is just beginning to recover from the impact of the two-year-old COVID-19 pandemic.

The Military offensive is expected to further disrupt supply chain and with it the supply of some key commodities.

As reported my Moneyweb, Russia and Ukraine are substantial players in the global commodities market. Russia produces about 10% of global wheat while Ukraine accounts for 4%. Combined, this is nearly the size of the European Union’s total wheat production.

The wheat is for domestic consumption and well as export markets. Together the two countries account for a quarter of global wheat exports. In 2020 Russia accounted for 18%, and Ukraine 8%.

Both countries are also notable players in maize, responsible for a combined maize production of 4%. However, Ukraine and Russia’s contribution is even more significant in exports, accounting for 14% of global maize exports in 2020.

Both countries are also among the leading producers and exporters of sunflower oil. In 2020, Ukraine’s sunflower oil exports accounted for 40% of global exports, with Russia accounting for 18% of global sunflower oil exports.

African countries imported agricultural products worth US$4 billion from Russia in 2020. About 90% of this was wheat, and 6% was sunflower oil. Major importing countries were Egypt, which accounted for nearly half of the imports, followed by Sudan, Nigeria, Tanzania, Algeria, Kenya and South Africa.

Similarly, Ukraine exported US$2.9 billion worth of agricultural products to the African continent in 2020. About 48% of this was wheat, 31% maize, and the rest included sunflower oil, barley, and soybeans.