The Heat Of The Russian Invasion Is Causing Inflation On The Food And Oil Prices
The invasion of Russia on the lands of Ukraine is turning up the heat on commodity prices, particularly the prices of wheat and oil. The experts are saying that the situation will be prolonged significantly if the conflict is not resolved quickly.
The inflation on the food prices in Canada will increase along with the worsening situation. The attack of Russia made Ukraine shut down the commercial port Thursday, hampering the major grain exports. Ukraine exports corn and barley to its buyers spread across the globe.
Similarly, Russia and Ukraine both are dominating suppliers of wheat in the continent. Combining both of their accounts, together they hold 29 percent of global wheat production according to Reuters.
Russian unprecedented act of aggression has and will have a long-lasting disruption of food Supply chains worldwide. The prices of wheat can hike to 9.30 US dollars per bushel on Thursday; it was the highest in nine years.
The director of the Agri-Food Analytics Lab at the University of Dalhousie, Sylvain Charlebois said, ‘Ukraine is Europe’s breadbasket’. Various grocery stores sensed the wave.
The oil prices have already gone up crossing 100 US dollars a barrel, and grocery stores in Canada are also about to get hit hard by the increased prices of various commodities and transportations as well.
Charlebois said, ‘We do have a trucking economy in North America, so that’s going to be problematic… (it will) obviously will make our food inflation situation much worse in the western world and also in Canada’.
Pressure on grain products might hit the bakery first, but Charlebois is worried that this will tell upon the prices of meat, dairy, and eggs, as any farm animal is fed with wheat. And accordingly, inflation will not limit wheat products and oil prices.
Last month inflation rate went up to 5.1 percent in Canada, the highest in the last 30 years. The Agri-Food Lab predicts the inflation rate will reach 6.5 percent. Charlebois fears that the price may hit seven percent or more in these coming months, considering the present situation in Eastern Europe.
‘What this conflict will do is bring a new layer of uncertainty and that will impact how companies negotiate prices, how they plan and things like that,’ he shared his worries in the press meet.
The director of the Western Canadian Wheat Growers, Dave Quist said that Canada has a large domestic agricultural industry, depending very less on the Eastern European countries for grain.
While the pricing of wheat is rising steadily, farmers are also facing issues with exportations and various setbacks that have raised production difficulties.
As many farmers have already placed their orders for the next crop cycle. And fertilizer is another missing piece of the agricultural system. Belarus and Ukraine are the major suppliers of fertilizers as well.
There will be shortages and delays of various parts and machinery that are extremely essential to keep the farming going.
The world economy is just about to revive after COVID, inflation strikes back.
I am Darryl Broadhurst and i give investors an insight into the most recent news hitting the “Technology” sector in Wall Street. I have been an independent financial adviser for over 11 years in the city and in recent years turned my experience in finance and passion for journalism into a full time role. I perform analysis of Companies and publicizes valuable information for shareholder community.
