Four Major Essential Commodities Impacted By the Russia Ukraine War

The European war which has already affected a myriad of commodities and their prices in various countries across the globe is still a major threat as it continues to escalate.

And because the two nations account for a larger portion of the imports of major manufacturing nations as well as essential suppliers of raw materials and energy for many crucial supply chains across the globe, the economic consequences of the war threaten the lives and livelihoods of many.

It might be difficult to prevent the looming crisis according to analysts, especially now that there is no surety of when the war will end.

Some of the essential commodities that have already been greatly affected by the ongoing war include

1. Food

Since the onset of the war, the food prices have spiked high across the world with commodities such as wheat and grain climbing as high as 1,924 shillings up by 7.62 percent – the highest level since 26 March 2008 when it traded at 1,244 shillings.

At the same time, Russia and Ukraine together account for more than a quarter of global wheat exports, while Ukraine alone makes up almost half of the exports of sunflower oil which are both key commodities used in many food products. Harvesting and processing have already been hindered by the war. Further blockage of the exports, is likely to pose more struggles for importers to replace supplies.

Furthermore, Russia is also the main supplier of key ingredients for fertilizers, so the trade sanctions have already affected production. In Kenya, fertilizer prices jumped above 7,000 shillings for a 50-kilo bag after Russia invaded Ukraine.

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Meanwhile, there is also a likelihood of diversions to trade flows, an example being China said it will begin importing Russian wheat.

2. Energy

Many Countries heavily rely on Russian energy thus, any slight disturbance has a significant impact. With the economic sanctions that have slapped Russia, there has been a disruption in the supply chain and hence, the already widespread economic consequence on different countries.

Global gas reserves were already low due to the Covid 19 pandemic and now that energy prices are rising sharply, consumers and industry have been impacted greatly. The Brent Futures oil on the International Exchange is at 130.70 per barrel. The West Texas Intermediate on the NYMEX has risen 1.69 percent to 14,352.64 shillings a barrel.

The consequences of further gas price surge may be associated with fertilizer plants shut down due to high energy cost which makes production untenable as well as shortages of carbon dioxide, which is essential for everything from medical procedures to keeping food fresh.

Such consequences are likely to magnify with the continued rising oil and gas prices.

3. Metals

Russia And Ukraine are the lead countries in the production of metals such as gold, silver, nickel, copper, and iron.

Since the war began, and the US put several economic sanctions on Russia, the prices of these metals have shot up to their highest levels last witnessed in 2oo8. The Price of Gold for instance has risen more than 9,130.40 shillings an ounce and topped out at 237,253.44 shillings.

Among other precious metals, palladium has hit an all-time high on supply concerns from top producer Russia, which accounts for 40 percent of all mined production of the metal

Spot palladium climbed as much as 5.3 percent to 4690.80 shillings an ounce. Spot silver on the other hand gained 1.7 percent to 38.61 shillings per ounce, while platinum jumped 2.3 percent to 1,697.84 shillings.

The prices of nickel and copper, which are used in manufacturing and building respectively, have also been soaring.

4. Transport

The rising oil prices due to the war are a worry to the general transport industry globally, especially the shipping industry. Freight rates are already extremely high and could rise even further.

While rail carries only a small proportion of the total freight between Asia and Europe, it has played a vital role during recent transport disruptions and is growing steadily.