EAST AFRICA- The Economic Intelligence Unit (EIU), the research and analysis division of the Economist Group, is forecasting higher wheat commodity prices for East African countries due to their high reliance on Ukraine.
According to EIU, while demand may slow, supply won’t rise high enough to put enough downward pressure on prices, following a sharp decline in grain production in Ukraine, one of the world’s top exporters.
According to USDA, grain production in Ukraine has dropped to 65 million tonnes in the latest crop season from 108 million tonnes a year earlier.
Dmytrasevych Markiya, Ukraine’s Agriculture Policy Deputy Minister, said that the decline ascribe to several factors among them high prices of fertilizer and war that interrupted farming activities.
For countries in Africa; Kenya, Ethiopia, and Sudan who are dependent on these exports, further constraints in the Ukrainian grain initiative could mean further price hikes in food commodities.
In Kenya, millers had anticipated that the price of the wheat grain would drop starting this January but the ongoing events in Ukraine may see consumers continue paying more for wheat products.
However, On January 16, Mr. Markiya said the Ukraine government has given Kenya 2.7 million bags (25,000 tonnes) of wheat in a bilateral deal to help stabilize the price of the commodity in the wake of projected high prices.
Similarly, the ongoing obstruction of the Black Sea region continues to disrupt grain exports from Ukraine despite a call by Ukrainian President Volodymyr Zelenskiy who lamented that the obstructions continue to hurt food security globally.
In the EIU report, prices of grains have eased from their recent highs, but their direction in the coming months will continue to be influenced by events in the Black Sea region.
Speaking during an international conference of agriculture ministers in Berlin, Germany, Zelenskiy urged participants to support the Black Sea Grain Initiative to enable exports of grain and other foodstuffs through Ukraine’s major ports on the sea.
The closure of the Black Sea corridor- a major grain route for grain to the world market led to a high of US$540 at the peak of the war last year as the grain supply was cut short.
However, a United Nations-brokered deal saw the corridor opened in June with another extension issued in November, a move that helped to ease global prices that have settled at US$370 a tonne.
The official said that it is important for the corridor to remain open even with the ongoing aggression because of the key role that it plays in the world’s food security.