Wheat prices jump after Russia’s withdrawal from the Black Sea grain deal.

The risk of a new spike in global food price inflation emerged Monday after Russian President Vladimir Putin withdrew Russia from a grain deal in the Black Sea, sending wheat prices soaring and exposing vulnerable countries in Africa and the global south in particular to the possibility of a new crisis. Food insecurity tour.

Chicago wheat futures, a measure of global prices, jumped more than 4 percent as the Kremlin’s move once again jeopardized a key trade route to global markets for grain from Ukraine, one of the world’s main breadbaskets.

said Timothy Ash, senior sovereign strategist at BlueBay Asset Management in London and an expert on Russia and Ukraine. “This will hurt certain countries that depend on these exports,” Mr. Ash said. But beyond that, it “shows how vulnerable Putin is after the Wagner coup: He’s now desperate to get any amount of influence he can.”

The Black Sea Grain Initiative was implemented a year ago to alleviate the global food crisis after Russia’s invasion of Ukraine, when Russia banned ships from transporting the country’s grain from its Black Sea ports. These constraints soon pushed grain prices to record levels.

Since the agreement, food prices have fallen by more than 23 percent from their peak in March 2022, according to the Food and Agriculture Organization of the United Nations Food Price Index, which has registered a steady monthly decline over the past year. The agreement allowed the export of more than 35 million tons of vital food commodities from Ukrainian ports on the Black Sea to 45 countries on three continents, United nations He said.

With Black Sea ports closed again, Ukraine may have to double down on its use of alternative ways to get the grain out, including exporting via the Danube, trucks and overland trains — journeys that take much longer than putting goods on ships.

Certain factors may prevent food prices from rising to the staggering levels seen immediately after Russia’s invasion of Ukraine. For one thing, the global outlook for commodity prices is weaker than it was a year ago because of China’s faltering economic recovery, while a global cost-of-living crisis – fueled in part by rising food and fuel costs in the wake of Russia’s aggression – has eroded demand, Mr Ash said. in general.

Supply chain pressures are also easing, and manufacturing and production costs are falling, according to an analysis by Oxford Economics. However, while food prices have been drifting downward, they are likely to remain high compared to pre-war levels, the think tank said.

The day before Mr. Putin pulled out of the grain deal, he sent a separate warning shot to Europe by signing a surprise order temporarily taking over the Russian operations of two big European companies.

Danone, a global dairy producer based in France, said in a statement statement that its Russian assets had been put into temporary administration by the Russian authorities, and that they were “investigating the situation”. The company added that it is “preparing to take all necessary measures to protect its rights as a shareholder in Danone Russia, and to continue the company’s operations for the benefit of all stakeholders, in particular its employees.”

Danish brewer Carlsberg, the third largest beer maker in the world, said so I learned on Sunday that Baltika Breweries in Russia has been transferred to the temporary management of the Russian Federal Agency for State Property Management. Carlsberg announced his withdrawal from Russia more than a year ago. Last month, it said it was investing $40 million in its factories in Ukraine, and that it had found a buyer for the Russian operation, which employs 8,400 workers.

“Following the presidential decree, the prospects for the sale are now highly uncertain,” Carlsberg said in a statement Sunday.