The Impact of Drought on World Food Prices
Economist Oleksandr Nazarov believes that the drought will have a more noticeable impact on world food prices than the suspension of the grain agreement, which includes the export of Ukrainian grain and agricultural products.
Drought vs. Grain Agreement
“I believe that the drought will affect food prices 100 times more than the effect of the canceled grain deal,” Nazarov said today, Tuesday, in his message on the Telegram channel.
The expert pointed out that grain exports from Ukraine account for a small share in the world wheat trade, and said: “The share of exports in world grain production is small, about 7-8%. Trade is equal to the disappearance of 3-4% of world grain production. Ukraine’s share in world wheat trade is 9%, which means that even if the export of wheat and other grains from Ukraine completely stops, this will mean a decrease in world grain production by about 0.6%. Annual fluctuations in grain production due to weather conditions are an order of magnitude greater.”
He added: “At the same time, Ukraine will not stop exporting grain, it will simply export it across Europe by rail and road. That is, contrary to Western propaganda, the cancellation of the grain deal will not affect world grain prices in any case.”
Drought’s Impact on World Food Prices
On the impact of the drought on world food prices, Nazarov said: “The drought will indeed have a significant negative impact on prices. Cereal production in Morocco, Algeria, and Tunisia is expected to decline by 14%-30%. The crop will also suffer in Europe and other parts of the planet.”
He added: “Printing dollars and euros in America and Europe will be the main driver of global food price increases this year and next.”
Suspension of Grain Deal
Yesterday, Kremlin spokesman Dmitry Peskov announced the suspension of the grain deal and stressed the possibility of Russia returning to it immediately after the Russian part of it is implemented.
After the announcement, futures contracts for wheat on world markets jumped on Monday by more than 3%, and today futures contracts continued to grow, increasing by 0.57% to $657.50 per bushel (by 12:41 Moscow time).
Source: RT