The unfolding crisis in Ukraine has roiled commodity markets and threatens global food security. Ongoing fallout from the COVID-19 pandemic and other factors have already driven up food prices. Poor harvests in South America, strong global demand, and supply chain issues have reduced grain and oilseed inventories and driven prices to their highest levels since 2011-2013. Vegetable oil prices have also been at record levels, reflecting the short South American soybean crop, reduced palm oil supplies due to harvest problems in Malaysia, and sharply increased use of palm and soybean oil for biodiesel production. Prices of key energy-intensive inputs like fuel, fertilizer and pesticides have also been at near-record levels.
Russia’s invasion of Ukraine will further disrupt global markets, will have negative consequences for global grain supplies in the short term, and by disrupting natural gas and fertilizer markets, have negative impacts for producers as they enter a new planting season. This could push up already-high food price inflation, and have serious consequences for low-income net-food importing countries, many of which have seen an increase in malnourishment rates over the past few years in the face of pandemic disruptions.
