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Global stock markets tumbled while crude oil surged on Tuesday
as Europe's eastern flank stood on the brink of war after
Russian President Vladimir Putin ordered troops into breakaway
regions of eastern Ukraine. [MKTS/GLOB][O/R]
With the two countries accounting for around 29% of global wheat
exports, 19% of world corn supplies, and 80% of world sunflower
oil exports, traders worried that any military engagement could
impact crop movement and trigger a mass scramble by importers to
replace supplies from the Black Sea region.
Chicago wheat futures jumped more than 2% on Tuesday, corn hit a
seven-month high and soybeans also gained ground. All three key
food and feed ingredients have rallied around 40% from 2021
lows, lifted by a decline in global production and robust
demand. [GRA/]
"Disruptions in supplies from the Black Sea region will impact
overall global availability," Phin Ziebell, agribusiness
economist at National Australia Bank, told Reuters. "Buyers in
the Middle East and Africa will be seeking alternative sources."
Around 70% of Russia wheat exports went to buyers in the Middle
East and Africa in 2021, according to Refinitiv shipping data.
Traders say the stepped-up tensions have already caused some
buyers to divert vessels to other suppliers over concerns that
any outbreak of war would lead to lengthy loading delays.
"Ships are avoiding entering the Black Sea because of the war
risk," said one Singapore-based trader. "Supply disruptions are
already taking place."
A lack of supplies from the Black Sea region could lift demand
for the bread-making ingredient from the United States and
Canada.
World food prices already hover near 10-year highs, led by
strong demand for wheat and dairy products, the U.N. food agency
said late last year.
There is additional support for agricultural markets stemming
from a rally in crude oil prices, with increasing use of farm
goods in making alternative fuels.
(Reporting by Naveen Thukral; Editing by Kenneth Maxwell and
Louise Heavens)
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