- Wheat prices and corn prices have soared this year due to Russia's invasion of Ukraine.
- The conflict is adding further upwards pressure to prices that were already rising.
- "Uncertainty over the supply outlook means prices will remain elevated and volatile," ING said.
Global food prices are facing a fallout from Russia's invasion of Ukraine, with corn and wheat spiking on concerns over the implications for exports from two of the world's largest exporters of the commodities.
The conflict has sparked fears that production and export of the grains could be curtailed. Russia is the world's largest exporter of wheat, accounting for almost 17% of global supply, according to a report from ING citing data from the US Department of Agriculture.
Meanwhile Ukraine is a significant exporter of both wheat and corn, accounting for 12% and 17% of global supply, respectively.
"Given the importance of Russia and Ukraine to grain markets, uncertainty over the supply outlook means prices will remain elevated and volatile," ING's head of commodities strategy Warren Patterson wrote.
The conflict has fueled further upwards pressure on global food prices that were already rising due to the effects of the pandemic, according to the World Bank.
Wheat prices have risen by 67% so far this year, while corn prices have increased by 26%. That compares with a 21% increase in wheat prices in the whole of 2021, when corn prices appreciated by 23%.
"The war in Ukraine comes at a bad time for the world," a World Bank spokesperson told Insider. "Poor and vulnerable everywhere were already suffering from high inflation and rising food prices, exacerbated by higher energy costs and trade restrictions."
"Shortages of these commodities and broad-based increases in prices could add to inflation pressures and food insecurity," the spokesperson added.
The World Food Programme aired its concern early in the conflict, signaling that disruption to the two countries' agricultural production would drive food insecurity and hunger worldwide, according to an earlier statement by its executive director.
Analysts predict that rising costs of wheat and corn will likely hit US consumers too. Although it may take a while for the effects to be felt, the surge in prices could impact everything from cereal to cooking oils, as well as the price of meat since producers use grain to feed their livestock and poultry, the Wall Street Journal reported.
In low-income countries in the Middle East and North Africa, dwindling wheat supplies could exacerbate hunger crises in war-torn regions like Yemen and in countries reeling from economic crises like Lebanon, according to media reports.
The packages of sanctions imposed on Russia may prevent many firms from conducting business with the country, and potentially limiting supply of commodities such as wheat and corn.
"The risk of additional sanctions against Russia appears to have made buyers reluctant to commit to Russian supply," ING's Patterson wrote.
"There is also likely an element of reputational risk at the moment for some buyers. In addition, banks are less willing to finance the trade in Russian commodities, which will further weigh on Russian supply making its way onto the global market," he added.
Meanwhile fighting in Ukraine has closed ports and left many factories and warehouses shut, limiting Ukraine's ability to export its agricultural produce.
In a response to soaring wheat prices, Tom Vilsack, the US secretary of agriculture, said US wheat production, which ranks second in the world after Russia, according to The Observatory of Economic Complexity, would be boosted to help compensate the worldwide impact of lost exports from Ukraine, the AP reported.