Rama Subedi

March 1: Countries across the world have imposed sanctions on Russia one after another after President Vladimir Putin order invasion of Ukraine last week.

The situation has caused fluctuation in the price of oil globally. Commodity prices have also increased. Russia and Ukraine are the chief producers of oil, natural gas and metals.

Both the countries also play a vital role in supply of food grains across the globe. Wheat produced in Ukraine and Russia constitute 29 percent of the wheat traded across the world. These two countries also supply 19 percent of maize to the world.

Russia and Ukraine also supply 80 percent of sunflower oil to the world. The war between Russia and Ukraine has raised prospect of food crisis across the world. Importers of maize, wheat and sunflower are looking for alternative supply after the outbreak of war, according to analysts.

The price of wheat has increased by US$ 150 per 100 bushels. Egypt and Turkey are the major importers of wheat produced by Russia. However, the delay in supply of wheat will not only affect these two countries but will have a wider impact. Countries across the world will be impacted and the prices are expected to soar.

The price of wheat futures per 100 bushels (approx. 2,721 kg) rose to US$ 950, an increase by 1.63 percent from a day before. The price of wheat has skyrocketed since February 16. Likewise, the prices of maize and soybean have also increased. Maize futures rose from US$ 638 to US$ 695 per 100 bushels last Thursday.

Soybean futures also increased by US$ 125 per 100 bushels during this period. The prices of all three products have increased by 50 percent in February.

The prices have soared basically due to the decline in production and high demand for these food  grains.  Citing an agribusiness economist of National Australia Bank, Reuters said that the supply of food grains will be affected across the world if the supply is halted at the Black Sea due to the war.

A total of 70 percent of wheat exported by Russia were consumed in the middle east and Africa.

The Food and Agriculture Organisation (FAO) of the United Nations had said that the food prices were recorded at a ten-year high last year due to the Covid-19 pandemic. A report published by FAO this month shows that the food prices also increased this year mainly due to the increase in price of vegetable oils. Russia and Ukraine both are major exporters of vegetable oil products, especially sunflower oil.

The Ukraine-Russia war has resulted in an increase in demand for palm oil and soybean oil. Analysts say that the prices of all kinds of cooking oil are expected to rise in the near future.

The price of palm oil had already increased by 44 percent during the start of this year. Food prices are at all-time high after 2014 due to the Covid-19 crisis. The Russia-Ukraine war is further likely to worsen the condition. Analysts say that the war will increase transportation charge which in turn will increase food prices.

The price of crude oil has reached above US$ 105 per barrel for the first time since 2014. (With inputs from news published by various agencies)