- Oops!Something went wrong.Please try again later.
The invasion of Ukraine by Russian forces has closed grain ports in the Black Sea, causing concerns about food shortages in nations that depend on imports.
Russia and Ukraine are two of the largest wheat exporters in the world, together accounting for roughly a quarter of the world's wheat supply.
The magnitude of Russia and Ukraine's grain production is "the bigger issue" of concern, Johannes Schlingmeier, co-founder and CEO of Container xChange, said on Yahoo Finance Live (video above). On whether Russia and Ukraine’s grain stock could be replaced, Schlingmeier said: "I doubt that that’s the case.”
The countries that are most dependent on Russian and Ukrainian wheat include Egypt, Turkey, Bangladesh, and Iran, while other nations like Lebanon, Tunisia, Yemen, Libya, and Pakistan also heavily rely on wheat imports from that region.
With wheat futures spiking to a 14-year high this week, it warrants the question: “Where [else] can you actually get the grain from?” Schlingmeier said.
Locating wheat supply
This isn’t the first time that Russia has banned wheat exports — they did it in 2010, though the U.S. was able to pick up the slack. The global grain market usually responds to supply shortages by tapping other regions that have a surplus of the commodity.
However, that might not be the case this time around as any response from the U.S. could take time to come into effect.
Data from the U.S. Department of Agriculture indicates that domestic wheat stocks are at their lowest levels in years, with drought conditions playing a heavy role. The projected 2021/22 ending stocks are 23% lower year-over-year.
So far in 2022, farmers have seeded 34.4 million acres with winter wheat, which accounts for the majority of U.S. production.
“When it comes to supply chains, I think they are quite resilient and they can quickly shift to other places. I'm less concerned there,” Schlingmeier said, adding that the bigger question is: “Is there actual other supply somewhere else?”
While the U.S. wheat picture still remains unclear, there have been reports that Australia has become a top contender to pick up some of the supply slack, which could lead to a steadying of prices.
Still, the looming squeeze on grain supplies has opened a discussion around allowing acres protected under the federal land conservation program to be cultivated.
“We keep an eye on world events,” Zach Duchenaux, administrator of the U.S. Farm Service Agency, said. Though, nothing has been decided yet.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv