Tensions in Ukraine Creating Uncertainty in Grain Markets
Russia and Ukraine have a tense history. In 2014 Russia annexed the Crimean Peninsula followed by the removal of president Victor Yanukoych and the installation of a pro-Russian government in Crimea and its declaration of independence from Ukraine in March 2014.
Now, over the past few months, Russia has stationed approximately 125,000 troops on the Ukraine border, sparking political responses on a global scale.
These escalations continue to disrupt grain exports from the Black Sea and drive up crude oil and natural gas prices, which in turn push up nitrogen fertilizer prices, driving consumers toward biofuels, which itself results in greater demand for grain.
Ukraine has been called the breadbasket of Europe, however, many of its most fertile areas are in its east, along the Russian border - making them vulnerable to aggression. The USDA estimates that Russia and Ukraine will together account for 29 percent of global wheat trade in the 2021-22 marketing year, shipping 35 million tons and 24.2 million tons, respectively. However, Ukraine has already shipped a significant part of its expected 2021-22 exports, with 36.1 million tons of grain being exported since the marketing year began on July 1 - an increase of 27.7 percent over the 2020-21 season. More on this story