(Bloomberg) -- Crop prices extended their scorching rally, with cooking oils hitting fresh records, as traders weigh the devastating impact of Russia's invasion of Ukraine, which has choked supplies from one of the world's biggest grain growing regions and sent shock waves through global markets.
The war in Ukraine and the sweeping sanctions from the U.S. and its European allies have brought deals with Russia and Ukraine to a virtual standstill, with few traders willing to take the risk of entering new business or pay the extra cost of chartering and insuring ships to go into the war zone to collect cargo.
That's given another boost to crop prices that were already climbing on tight supplies after droughts and labor shortages, and the blistering rally in recent weeks may be enough to send global food costs to a record when the United Nations publishes its latest price index on Thursday.
Activity at ports in Ukraine has been at a standstill since Russia invaded its neighbor last week, and grains trade with Russia is also effectively on hold. The two countries supply more than a quarter of world wheat exports, a fifth of corn sales and a similar share of barley shipments, not to mention about 80% of sunflower oil cargoes. Sanctions have been ratcheted up to isolate Russia from the global financial system by sanctioning its central bank and cutting off various lenders from the SWIFT financial messaging system.
Vital Food Supply Choked Off With Russia, Ukraine Crops in Limbo
Top importer Egypt was forced yet again to ditch efforts to buy the wheat it needs to subsidize bread for its people on Monday, highlighting the threat the war poses for countries that need to buy foreign food supplies. Palm oil in Kuala Lumpur and soybean oil in Chicago jumped at least 3.6% to all-time highs on Tuesday, while wheat, corn and soybeans were up more than 2% in Chicago.
©2022 Bloomberg L.P.
With assistance from Bloomberg
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
