President Vladimir V. Putin’s withdrawal of Russia from the Black Sea Grains Agreement sent wheat prices skyrocketing, exposing vulnerable countries, especially in Africa and the Global South, to new prospects of food inflation. , the risk of a fresh rise in global food inflation emerged on Monday. A round of food insecurity.
Chicago wheat futures, a barometer of global prices, rose more than 4% as the Kremlin move once again jeopardized a vital trade route that brings grain from one of the world’s major breadbaskets to world markets. .
Timothy Ashe, senior sovereign strategist at BlueBay Asset Management in London and an expert on Russia and Russia, said the move would reassert Putin’s strong aura of authority following a failed uprising by the Wagner Group. He said it was seen as part of his broader efforts. Ukraine. “It will hurt certain countries that rely on these exports,” Ashe said. But more than that, “this shows how weak Putin is after the Wagnerian coup. He’s now desperate to get whatever bit of influence he can.”
The Black Sea Grains Initiative was launched a year ago to ease the global food crisis after Russia’s invasion of Ukraine. At that time, Russia blocked ships carrying Russian grain out of Black Sea ports. These blockades caused grain prices to soar rapidly to record highs.
Since the deal, food prices have fallen more than 23% from their peak in March 2022, marking a steady monthly decline over the past year, according to the United Nations Food and Agriculture Organization’s Food Price Index. The agreement has enabled the export of more than 35 million tons of essential food products from Ukrainian ports on the Black Sea to 45 countries on three continents. united nations Said.
With Black Sea ports closed again, Ukraine may have to double down on alternative routes to transport grain, including exports via the Danube and overland trucks and trains. These shipments take much longer than loading goods on ships.
Several factors may have prevented food prices from rising to the alarming levels seen shortly after Russia invaded Ukraine. First, the outlook for global commodity prices is weaker than it was a year ago, partly due to the slowing economic recovery in China and the global cost of living crisis, partly due to soaring food and fuel prices following Russian aggression. sluggish. Ash said demand is eroding more generally.
An analysis by Oxford Economics finds supply chain stress is also easing, lowering manufacturing and production costs. Still, although food prices are trending downwards, they are likely to remain high compared to pre-war levels, the think tank said.
The day before he pulled out of the grain deal, Putin fired another warning shot at Europe by signing a surprise order temporarily seizing the Russian operations of two of Europe’s biggest companies.
Danone, a global dairy manufacturer based in France, said: statement Russian assets have been placed under temporary control by Russian authorities, he said, adding that they were “investigating the situation.” The company “is prepared to take all necessary measures to protect our rights as shareholders of Danone Russia and to continue our business operations for the benefit of all stakeholders, especially our employees,” it added. rice field.
Danish beer company Carlsberg, the world’s third-largest beer maker, has revealed. learned on sunday Russia’s Baltika Brewery has been transferred to the temporary management of the State Property Management Agency of the Russian Federation. Carlsberg announced its exit from Russia over a year ago. The company announced last month that it had found a buyer for its Russian business, which will invest another $40 million in a Ukrainian factory and employ 8,400 workers.
“Following the executive order, the outlook for this sale process is highly uncertain,” Carlsberg said in a statement on Sunday.