Grain and Beef Prices Have Soared Amid Global Tensions

Global grain and beef prices remain high due to the resurgence of COVID-19, the Russia-Ukraine conflict and global inflation.

Russia and Ukraine are both major global food exporters, accounting for 25 percent of the world's food supply. Russia is the world's second largest wheat exporter, accounting for 10% of global production and 15.8% of world exports. Known as the "breadbasket of Europe", Ukraine's main crops are maize, barley and wheat. It is the world's fourth largest exporter of maize, accounting for 16.7% of world exports, and the fifth largest exporter of wheat, accounting for 10% of exports.

However, since the outbreak of the conflict between Russia and Ukraine, grain production in both countries has been affected to varying degrees. In addition, the Ukrainian government has imposed an export ban on agricultural products such as wheat, and Russia only exports grain to friendly countries in rubles and national currencies, which has hindered the production and export of grain in the two countries. Prices for wheat, corn, soybeans and other agricultural products continue to climb. According to the UN Food and Agriculture Organization statistics, the recent surge in wheat prices reached 19.7 percent, and the world corn price rose 19.1 percent month-on-month. The mix of global grain supply in the coming months will also change.

In addition to strains in the global grain supply chain caused by the conflict between Russia and Ukraine, rare droughts in North and South America and Australia are also threatening crop yields. Argentina, a major grain exporter in South America, has introduced policies to limit exports in favor of domestic supply and demand. Therefore, the combination of various factors, global grain prices will remain high and strong operation.

Influenced by the rise of global grain prices, the global feed prices also continue to rise, indirectly pushing up the production cost of aquaculture, resulting in a sharp rise in global beef prices. The FAO Food Price Index reached 140.7 points in February, up 5.3 points (3.9 percent) from January and 24.1 points (20.7 percent) from the same month last year, setting a new record high. In terms of meat, it was up 1.1% month-on-month and 15.3% year on year. Strong global import demand, on the back of a tight supply of cattle to slaughter in Brazil and strong demand for herd reconstruction in Australia, drove international beef quotes to a record high in February.

At the same time, unprecedented inflation is sweeping the world, increasing the risk that everything will explode. While this global inflation has contributed to soaring global grain and beef prices, high grain and beef prices have in turn continued to push up overall global inflation.