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We have seen how Russia’s invasion of Ukraine – coming after the Covid supply disruptions – has sent food prices soaring to record highsaccording to the UN’s Food and Agriculture Organization.

The supply gap from the war could push global food and feed prices as much as 22% above their already elevated prices, the FAO said late last week.

Wheat prices have led the rises, not least because Ukraine itself accounts for about one-eighth of global trade in the commodity, or about 25 million tonnes in a normal year. Russia exports too, are likely to face more sanctions.

The more immediate risk – which is not as priced into commodity markets – is in the spring crops that are not yet planted in Ukraine, namely corn and sunflowers, according to Stefan Vogel, head of the Australian unit of RaboResearch.

The European Union, for instance, sources 40-60% of its feed grain for animals from Ukraine. The US would be a potential supplier but the EU restricts genetically modified crops, making Brazil the only major alternative source, Vogel said.

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Global #foodprices rise to record high in February, led by vegetable oils & dairy products.

The @FAO Food Price Index averaged 140.7 points in Feb, up 3.9% from Jan, & 3.1 points higher than in Feb 2011.

World wheat & maize production seen rising in 2022https: //t.co/PPgoW3NqMO


March 4, 2022

Brazil’s grain crops were poor last year, so there is an expectation that supplies will not be as low.

“Brazil needs to be exceptionally good – and it does not look like it for now, but we’re in the early stages – to really bring price pressure on the corn market,” Vogel said.

While richer nations can shuffle supplies and substitute crops, poorer ones do not have that luxury.

Assuming the disruptions are prolonged, the global number of undernourished people could increase by 8 to 13 million people in 2022/23, with the most pronounced increases taking place in Asia-Pacific, followed by sub-Saharan Africa, and the Near East and North Africa ”, the FAO said.

Vogel expects the impact on food prices prices to be sustained, particularly because energy prices are likely to stay high, pushing up the cost of inputs including fertilizers.

“I think the grain market has to work through this [shock] not only in the next two months, but probably the next two years, ”he said.

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