World wheat prices have risen to a nearly three year high

The market is reacting to increasingly severe disruptions in export logistics, particularly following attacks on Ukraine's largest port on the Danube and Russian terminals in Novorossiysk over the past two weeks, according to the Financial Times.

Russia is the world's largest grain exporter, while Ukraine ranks fifth. Together, these countries account for approximately 30% of global wheat exports.

According to Oxford Economics, disruptions to ports in the Azov and Black Seas could reduce global grain shipments this year by 86 million tonnes, or approximately 17% of global exports. Of this, 52 million tonnes are exported to Russia, and another 34 million tonnes to Ukraine.

Alternative routes for Ukrainian exports by rail and across the Danube can only offset approximately 17 million tonnes. And this is assuming that the capacity of these routes is further increased. Therefore, Ukraine will not be able to completely replace sea routes through the Black Sea.

Rising wheat prices are increasing pressure on agricultural production due to widespread drought, disruptions caused by the El Niño weather phenomenon, and fertilizer shortages resulting from the US-Iran war.

This is raising concerns about a new spike in global food prices, which, according to Oxford Economics, will rise by 11.8% this year and by a further 4.8% in 2027.

Photo: Forbes.ua.