The Global Wheat Shortage May Be Finally Coming To An End
There are finally some signs of relief from extravagant wheat prices that have plagued the global food market since February, per the Wall Street Journal. Shipments of Russian grain and good harvests have brought commodity prices for wheat below $10 per bushel for the first time in four months.
Wheat supply issues began earlier this year when Russia invaded neighboring Ukraine (via CNBC). Combined, the two countries produced about one-third of the global wheat supply according to the Atlantic Council. With the two tangled in a war, it was unclear how wheat harvests would be affected. For months, millions of tons of Ukrainian grain supplies sat in silos and warehouses along their black sea ports. Ships were unable to depart due to a Russian naval blockade, and prices for foods like pasta and bread started to rise for consumers.
There was finally some relief last week as Turkey, Russia, and Ukraine negotiated safe shipping channels for Ukrainian wheat to leave the country (via Reuters). Now, other countries are starting to see above-average harvests that are also helping to lower the prices for consumers.
Russian wheat exports are easing the crisis
As of July 1, wheat commodities had dropped down to $8.41 per bushel from a high of $13.11 in March, per CNN. According to the Wall Street Journal, these price drops are due to strong predictions for harvests in the United States, Europe, and Australia, and also shipments of Russian wheat headed to developing countries.
The Wall Street Journal reports the USDA raised its predictions for Summer wheat production by 8 million bushels earlier this month. Another reason for lower wheat prices are high sales of Russian wheat, which has been headed to "friendly countries" in recent weeks. The outlet notes that nations in the Middle East and Africa have been buying more wheat from Russia in the past months, with purchases of Russian wheat in those regions 60% higher in May 2022 compared to May of last year.
While there have been sanctions placed on Russian oil and other exports, Reuters explains there are none against wheat. With an ongoing global food crisis brought on in part by the war, the Biden administration has said it supports Russian wheat shipments as a means to help ease grain shortages (via CNBC). Some shipping and insurance companies remained nervous to do business with Russian exporters because of other sanctions, and in May the U.S. government stated it would send "comfort letters" to those companies to help ease their fears and get shipments moving.