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By ROMAN DAWIDOWICZ 8,420 views
FINANCE

Russia’s Ukraine Actions Raised Grain and Oil Prices

The Russian-Ukrainian war didn’t come as a surprise to many, due to the rising tension between the two countries. The tension escalated and turned into war in February 2022. Many people have died, many businesses were destroyed, and lives never remain the same.

The war has disrupted the global market, especially commodity trading in Russia and Ukraine. Commodities traders and investors are complaining that grains and oilseeds are getting scarce.

Effects of the Russian-Ukrainian war

The Ukrainian crisis has caused significant inflation globally. The economy of most nations is not stabilized due to a lack of food and inflation.

According to Roman Dawidowicz, a grain and oilseeds trader, the war has made it impossible to farm in Ukraine. Industries, companies, plants, and many more have been destroyed in the country. This has crippled the economy of Ukraine. In addition, sanctions have been imposed on Russia, which makes it impossible for Russia to import or export goods. Russian farmers cannot import fertilizers for their crops, nor sell their farm produce.

Roman Zenon Dawidowicz also says that the war and the sanctions have affected trading in Ukraine and Russia. It has also led to the scarcity of grains and oilseeds, and the high price of commodities.

Low-income countries that import food from Russia and Ukraine have been affected by this war. Some of these countries can not afford the new price of commodities in the market. This has resulted in a lack of food and an increase in the number of malnourished people in these countries.

A month after the war started, prices of food increased again. Low-income countries that rely on the supply of food from Ukraine and Russia are experiencing food shortages. The declining economy declined further, which prompted economic experts to find solutions to these problems.

Some of the experts suggested that nations need to adjust to the recent developments and find alternate means.

Others have warned the world to prepare for continuous hunger and economic meltdowns if this continues. They justified this by saying that Ukraine and Russia export about eighty percent of the world’s commodities. So, if these major exporters are no longer exporting their products, the world will suffer.

Furthermore, Russia is not making things easy by preventing trading around the Black Sea regions. These regions are used as supply channels by traders.

Prices of Grains, Oilseeds, and Commodities since the war started

The price of wheat has tripled the original price and will still increase further if something is not done. Corn and Soybean prices have also increased. This is causing fear among people, and some have started to panic-buying.

Raw materials used for producing fertilizers have become scarce and costly too. Russia used to export these raw materials before they were sanctioned by the world because of the world. However, they have been stopped from exporting the materials. Due to this, fertilizer producers lack the raw materials for producing fertilizers. Therefore, many farmers are unable to buy fertilizers for their farmlands.

The good news is that governments are ready to inject money into agriculture to help farmers. This will reduce inflation and the prices of commodities. Similarly, it will reduce food insecurity and improve the economy of a nation.

Prices of Grains, Oilseeds, and Commodities in Some Countries

America

Russia and Ukraine are the largest producers of wheat, sunflower oils, and corn. They are followed by America. However, America relies on Russia because Russia is the biggest seller of raw materials used to make fertilizers. But America is among those who sanctioned Russia, hence Russia has stopped selling goods to them. Therefore, the cost of these raw materials for making fertilizers is high. This is the reason why America is in dire need of fertilizers to make their crop grow well. Furthermore, prices of fertilizers have increased in some states. This has also influenced the prices of agricultural products.

Egypt

Egypt is one of the major importers of grains, oilseeds, and other commodities from Ukraine. They rely heavily on Ukraine and the Black Sea regions to supply them with these goods.

Before the Russian-Ukrainian war started, Egypt has already been experiencing food shortages. The Egyptian economy is not stable and people are hungry.

The recent war between Ukraine and Russia has stopped the importation of goods from Ukraine to Egypt. This has further worsened the economic and food situation in Egypt.

Future Predictions of Prices of Grains and Oilseeds

Financial experts have predicted a further rise in the prices of grains and oilseeds in the future.

Many foresee a future where each nation will have to resort to buying food in small quantities.

Conclusion

According to Roman Dawidowicz, it is uncertain if the prices of grains and commodities will come down. Low-income countries should not put all their hopes in Ukraine and Russia and find alternative sellers.

Roman Dawidowicz
Author
ROMAN DAWIDOWICZ

Roman Zenon Dawidowicz is an Intermediate Mandarin speaker with Taiwanese qualifications and over 12 years of experience in the grain and oilseeds physical markets in a global origin/destination.