Wheat prices in the global market fall by 27 per cent from record high despite Ukraine crisis

The wheat crisis that arose in the international market in the aftermath of Russia’s invasion of Ukraine has not been over. And yet the price of this commodity has steeply declined of late. On Tuesday June 28, the wheat price was only $9.39 per bushel (approx. $313 per tonne) while on March 7, it had gone up to $12.94 per bushel ($431 per tonne). Thus, the prices have come down by 27 per cent from the record high. However, the prices hovered around $6 per bushel a year ago in July 2021.

Wheat prices in the international market were already running high before the Russia-Ukraine war. Covid-19 had disrupted the supply chain. This led to scarcity in several countries and the prices started rising. The war aggravated the situation further. Russia and Ukraine have a share of 30 per cent of wheat exports in the world.

An assurance from Russia is the primary reason why wheat prices have fallen. Russia and Ukraine have said that they are willing to discuss how to ship the wheat from Ukraine through the Black Sea route. In fact, the issue also came up at the G7 Summit in Germany recently and these countries urged Russia to consider this.

Just after the war started, India tried to promote wheat exports. Farmers had then got prices 30-40 per cent above the Minimum Support Price (MSP). But it was soon learnt that an unusual rise in temperature in March had harmed the wheat crop in the northern states. The public procurement also got stuck at 187.46 lakh tonnes (lt) in comparison to 434 lt last year.

In view of the wheat crisis looming ahead, the government decided on May 13 to prohibit wheat exports. However, 18 lt of wheat was exported in a month and a quarter after that. These exports were made at the request of the governments of several countries, including Bangladesh.

On the other hand, wheat and other foodgrains have been stuck at the Ukrainian ports due to the war. These ports have either been blockaded or occupied by Russian forces. However, one does not expect exports from Ukraine immediately because ports, too, have been damaged in the Russian bombing. Besides, mines that have been laid in the sea will have to be removed.

Besides wheat, the prices of maize and soyabean have also started falling. The prices of these crops have declined in anticipation of good global yields. The prices of other agricultural commodities are also showing signs of softening in the global market. Some experts believe that the inflation in agricultural commodities has reached its peak. The lifting of lockdown in China, too, has led to an improved supply to other markets. This is also getting reflected in the prices.