CHICAGO, Illinois: It is not only oil and gas prices reaching new heights because of the war in Ukraine, as wheat prices have now reached new highs.
Officials said consumers should prepare for higher prices for products made with corn and wheat, as prices for wheat are up 37 percent, while corn prices increased 21 percent in 2022, after rising more than 20 percent in 2021.
In the United States, companies such as Kelloggs and General Mills have had to raise prices in the past year, and are expected to continue increasing costs to consumers.
Ukraine is considered Europe’s “bread basket,” accounting for 12 percent of the world’s total wheat exports, according to the U.S. Department of Agriculture.
Ukraine also supplies 16 percent of the world’s corn exports.
“The U.S. is not a key trading partner with Russia/Ukraine, but is nonetheless likely to feel the shock from other major countries that do rely on Russia/Ukraine,” said CFRA analyst Arun Sundaram, in a note to investors.
Other agricultural products could see increases in prices as sanctions on Russia could slow the export of materials needed in the production of fertilizers.
“Any cutoff..in those areas would be quite damaging to western economies,” said Barry Bannister of Stifel, according to the Associated Press. “That would be very destabilizing; the risk really isn’t energy, it’s agriculture, if this is dragged out.”
With an eye on inflation in the U.S., which has reached a four-decade high, food producers have indicated they would continue raising food prices to keep up with inflation.
Meanwhile, Tom Vilsack, U.S. Secretary of Agriculture, said last week that American wheat farmers would increase production to help offset the global impact of lost exports from Ukraine.