The Real Reason Food Prices May Soon Drop
Global food prices have been on the rise for much of this year due to the Russian invasion of Ukraine, per CNBC. The two countries make up about a third of the world's wheat exports, and commodity prices for the crop, along with others, skyrocketed quickly after Russian troops first set foot on Ukrainian soil.
Reuters reports that the invasion began on February 24, 2022. On February 13, wheat commodity prices were recorded at 793.75 cents per bushel and jumped to 1,201.50 by February 27, 2022 (via CNN). Other food and commodity prices have been high as well due to the uncertain future of the war. Prices have remained high since and put a strain on average shoppers trying to feed themselves and their families. There might be some relief ahead though.
Global food prices are expected to drop soon, after Russia agreed to open a safe shipping corridor earlier this week, per CNBC. This will allow ships to safely travel out of Ukraine's Black Sea ports. Some of the sanctions levied against Russia as punishment for the invasion will be lifted in return. Much of Ukraine's grain consignments are being stored in nearby silos. CNBC reports that 20 million tons of grain have been in storage since the conflict first closed down the shipping ports. The price of other food items is expected to drop as well as other commodities are shipped from the ports.
Ukrainian exports will relieve some of the global supply issues
Exporting stored wheat will allow Ukraine to ease some of the world's food supply issues (via CNBC). Commodity prices for corn, cotton, sugar, and wheat each fell slightly after the shipping corridor was announced. Ukraine is also a major exporter of corn and sunflower oil. Increasing the global supply of these commodities is expected to help lower food prices overall as supply chains are able to return to normal operations.
The impact on food supplies has been one of the big stories coming out of the four-month-long conflict. Sanctions against Russia have increased fuel and fertilizer expenses, which has raised operations costs for many farmers starting their growing seasons. Food supplies within the country have been strained as well.
Russia has even been accused of targeting Ukrainian food supplies and specifically going after one of chef Jose Andrés World Central Kitchen (WCK) operations. WCK was operating several locations in major cities throughout the country in order to help feed those who chose not to flee to support the war effort. One of their locations near Kharkiv was bombed during an airstrike.