Russia’s invasion of Ukraine could devastate global grain markets so deeply that it’s likely to be the biggest supply shock in living memory, reports Bloomberg.
That’s according to Scott Irwin, an agricultural economist at the University of Illinois. Tens of millions of acres of grain production are at stake, he said Wednesday on Twitter.
“I am convinced it is going to be the biggest supply shock to global grain markets in my lifetime,” Irwin tweeted.
In an analysis from Reuters on Thursday, the threat to wheat supplies from the invasion of Ukraine has been exacerbated by a shift in global stocks away from major exporters such as the U.S. and European Union, undermining their effectiveness as a cushion in times of crisis.
Stocks in major wheat exporters -- the European Union, Russia, U.S., Canada, Ukraine, Argentina, Australia and Kazakhstan -- are set to fall to a nine-year low of 57 million tonnes by the end of the 2021/22 season, International Grains Council (IGC) data shows.
They now account for just one-fifth of global inventories and, with world consumption expected to total 781 million tonnes, that would feed the world for just 27 days.
If Russia and Ukraine are excluded, other major exporters account for 16% of global stocks or enough wheat to feed the world for less than three weeks.
The world “desperately” needs farmers to plant more acres in 2022, Irwin tweeted, but “basically nothing can be done in the short-run except to run up the price of grain high enough to ration demand.”
