A spike in wheat prices and a worsening of the global food crisis were some of the consequences of Russia's attack on Ukraine.
The area around the Black Sea has been dubbed the "world's bread basket" due to its high rates of grain production. Some countries, especially in the Middle East and northern Africa, rely a lot on wheat from the region.
Grain exports were cut off from a key port in southern Ukrainian when Russia invaded the country. The price of wheat went up so much that it made food prices go up.
It would take more than five months for Ukraine grain shipments to resume across the Black Sea. There are still threats to the wheat supply.
A grain markets economist at Texas A&M University told Insider that some things have changed but not all.
When Russia invaded, there were many unanswered questions, such as how or when Ukraine would be able to move grain that was ready for shipment. If farmers can't tend to their fields, what will this year's crop look like? Will Russia be able to export its own grain?
Despite the ongoing war and the fact that Ukraine had not yet been able to ship from its ports, the price of wheat rose in March and then fell in May. The winter wheat crop in the Northern hemisphere began in June and July, alleviating some of the shortage concerns. Grain could be moved by land.
The price of wheat fell to pre-war levels after the United Nations brokered a deal to resume Ukrainian exports through the Black Sea. The first ship transporting Ukrainian grain through the Black Sea set off from the port of Odesa on August 1st.
There hadn't been anything at that point. Since the invasion, that port has been closed. The first ships to leave the port on August 1 were carrying grain that had been loaded on them the day of the invasion.
Russia is also increasing their grain exports, and the opening of the port was very positive. Some of the most dire prospects that we were looking at were alleviated by that.
Ukraine's total grain exports are expected to be down this year, though much of the crop appears to be saved due to resilience and ingenuity of farmers in the country. Grain exports from Ukraine, which make up 12% of global wheat exports, are expected to make up two-thirds of the amount in 2021.
If weather and resources cooperate in another part of the world, a shortfall in one area can be made up for.
Canada may be able to compensate for the shortfall by growing wheat.
Excess wheat can be Harvested in Canada, but that doesn't mean it can be transported to countries that rely on Ukrainian wheat. It would be difficult to transport wheat from Canada to that part of the world.
Even though we're moving some grain, if you're a country with limited resources or income ability to afford high food prices, it can still create a lot of internal stress. Supply compensations should help the price of wheat return to its previous highs.
Despite the reopening of the port at Odesa being a major step forward, there is still a lot of uncertainty. The wheat stocks-to-use ratio, a measure of how much grain is leftover from last year that can be used this year, is still tight, and has been since 2007, when wheat prices were at record highs.
He said that as long as there is a tight situation for wheat, there will be fluctuations in the market.
The situation is made worse by the fighting in Ukraine, which is still going on with no end in sight.
Even though things are moving and that's very positive and good to see, it doesn't appear that the threat is lessened.
The uncertainty and risk is still with us despite the fact that things have settled.
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