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Moscow: The world is obsessed with the oil crisis at the time of the coronavirus pandemic, and prices are changing hour by hour.
Source: Jutarnji.hr
Photo by Epa, Khaled Elfiqi.
However, somehow, almost unnoticed, there was a crisis in another market: cereals.
Wheat becomes “yellow oil”, even more important than fossil fuels and their derivatives. Specifically, according to the Food and Health Organization of the United Nations, this crisis, as a consequence of the coronavirus pandemic, could lead to a global shortage of wheat and, sometimes, starvation and destabilization of many countries and regions.
Some analysts believe 2010 could repeat itself when droughts and weak harvests in some of the major cereal producers caused cereal shortages in the Arab countries, which was, among other things, an additional boost to the wave of revolutionary proets known as the Arab Spring, the most significant “results” of which are the civil wars in Syria and Libya, which have not yet subsided, writes Jutarnji List.
So what happened in the wheat market now? Russia, as one of the world’s largest producers and the world’s largest cereal exporter, suspended exports in early July. This has caused market tensions and panic among major importers such as Egypt, Indonesia, Algeria, Morocco, Nigeria and especially Turkey, who are already experiencing problems with stocks, but also with the purchase of this important food product. Wheat has become more expensive than oil, which has not been reported so far.
Russia’s decision “overshadowed” the world market, and a statement by Russian Prime Minister Mikhail Mishustin caused confusion. Misustin said that “the needs of the native population are more important” and that “Russian citizens are given priority.” This was a signal to many that Russia was mounting fears that the coronavirus might cause wheat problems in the domestic market, so it needed to calm its own social tensions. Others believe that Russia is waiting for wheat prices to rise to at least partially cover the losses caused by the record drop in oil prices, its main export commodity on which Moscow builds its power, but also calculates its annual budget.
Russian wheat has become even more interesting due to the fall of the ruble against the dollar and the euro, due to the fall in oil prices. In addition, a very good harvest is expected this year. Russia has returned in the last 20 years as one of the main players in the cereal market, among the main producers and the world’s leading exporter (for 2019/2020, around 73 million tons, of which around 34 million tons).
Remember that the USSR imported wheat from the United States and was unable to meet its needs, and that Imperial Russia, before World War I, in 1914, was the world’s largest exporter and one of the largest producers (however, Even then, the domestic market was scarce and wheat scarce), but this did not save her from the sinister fate that hit her during the Great War.
The export ban now does not apply only to four post-Soviet states in Russian orbit: Armenia, Kyrgyzstan, Tajikistan, and Uzbekistan. However, the current shortage of Russian wheat will be covered by US stocks. USA And the EU, that is, France, in the first place, as the most important agricultural giant in Brussels, which will benefit the most from the Moscow measure. Ukraine, as one of the largest European manufacturers and exporters, is also at a disadvantage, but is at great risk because analysts fear that Kiev will have to sell more than it plans to cover the budget holes, but then it is a problem in your own market.
The EU has produced 156 million tonnes (of which France is around 40 million tonnes) and exports more than 30 million tonnes. Ukrainian production was at the level of 29 million tons and export of 20 million. Additionally, the United States produced 52 million and exported 25 million, as did Canada, which harvested 32 million tons last season.
Egypt, the world’s largest importer (12.5 million tonnes, of which more than three million from Russia), has already offset this from France, but many wonder what will happen in the face of an economic recession that will be devastating only in importing countries. Despite such imports, the state in Egypt is further subsidizing the price of bread.
In addition to Egypt, Indonesia’s main wheat importers are Indonesia with 11 million tons, Brazil with 7.7 million tons and Algeria with seven million tons. Nigeria also has problems with the quantities of wheat and, due to the oil crisis, there are holes in the Treasury. Because of this, many fear that these countries may not be able to buy enough wheat to meet their needs.
According to the UN, around 135 million people are already experiencing food shortages in Africa, and in 2020, due to the pandemic, that number could increase to 265 million people who will suffer from food shortages.
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