War in Ukraine expected to impact wheat prices in Canada and around the world

Russia’s unprovoked war on Ukraine is not only impacting the people in Ukraine but also heavily impacting producers and consumers around the world.

Ukraine and Russia are second and fourth in world production of wheat, producing 60 million tonnes a year.

Stuart Smyth from the University of Saskatchewan says countries like Canada and the U.S. are big wheat-producing nations, but the lack of supply ultimately will not meet the demand.

“I haven’t hit the panic button yet, but my fingers are getting closer to the button every week.

“Even if production is ramped up in those other countries, we cannot producer 60 million tonnes this year. Wheat production is going to decrease over the calendar year,” he explained.

Smyth says the United Nations World Food Program is going to take a major hit going forward, as they buy half of their wheat from Ukraine.

“I think one of the biggest impacts is going to be on food security in a lot of African countries, where the world food program has activities in operation in.”

University of Manitoba professor Ryan Cardwell says consumers in Canada shouldn’t worry about rising food prices yet, but those in low-income countries are going to take a major hit.

“They spend a very large share of their incomes on food, and they typically buy less processed commodities so the share of the wheat cost in their food budget is higher.”

Cardwell says the focus should be on helping out those countries that will be paying more for food going forward.

“It’s people in low-income countries who spend a lot of their incomes on food and refugees including coming out of Ukraine that relies on food aid that has to be purchased that could be higher food prices.

What could this mean for grain farmers in Canada? Could this be beneficial in the long term? Robert Misko from the Manitoba Crop Alliance says he doesn’t see that happening.

“Price of fuel is going up, fertilizer was going to be in tight supply this Spring as it was with export and import bans. Russia is a pretty big fertilizer producer, so Euria is going to have a tightening effect. Chemicals are up, supply chains are still ongoing. The reality is the situation is going to be tight for farmers.”

As for what the future holds? Smyth says there’s a lot of uncertainty as to what food prices will look like going forward.

“You know because all of our food is transported in this country, that may continue to drive up food prices in the Spring and into the Summer.”