Russia-Ukraine War: What Does it Mean to the Wheat Market in Africa?

Since the war between the two European Nations broke,  the global market has been shaken and prices of commodities spiked to an all-time high. The African continent is already feeling the heat, in various industries including the wheat market.

Recent studies show that wheat and wheat products account for one-third of the average national cereal consumption in the Eastern Africa Region, with the highest consumption per capita in Djibouti, Eritrea, and Sudan. Yet, 84 percent of wheat demand in the region is met by imports.

The Russia Ukraine war has already had a great effect on the global wheat prices which has hiked to an all-time high last witnessed in 2008.

Because most African Countries largely depend on the wheat imports from the two nations, some countries such as Sudan are likely to be more severely affected by the fallout of the ongoing conflict, followed by Kenya and Ethiopia.

Kenyans will have to brace for tougher economic times ahead of course. Already, the effect of the hike in prices of commodities is felt in the country.

For instance, the latest available numbers indicate that the wheat importation stood at Ksh.11 billion and Ksh.5 billion from Russia and Ukraine respectively in 2019. The conflict directly puts a strain on this supply chain rendering the price of wheat with an upward trend.

ALSO READ: Wheat Prices Jump by 7.62% to Trade at Ksh. 1,924 Per Bushel

Currently, the annual national consumption of wheat is 24 million bags and 2 million bags per month in Kenya. Data from Agriculture and Food Authority show that 90 percent of food consumed in Kenya comes from Russia and Ukraine.

Wheat prices have climbed up to the highest level in more than a decade with a bushel trading at 1,924 shillings, up by 7.62 percent – the highest level since 26 March 2008 when it traded at 1,244 shillings.

Considering how vital bread is in Kenyan households, we cannot start to imagine how that pressure could go in affecting the pocket of the ordinary Kenyan.

The anticipated price hike will only add to the misery of the locals after we experienced a price increase of 800g loaf of bread by 30 shillings in the last five months and 40 shillings price increase for a 2Kg packet of wheat flour in the past half-year.

Meanwhile, the price of corn which is also a major agricultural product of Russia and Ukraine features at 774 shillings per bushel. This is a settlement 5.07 percent increase.

Ethiopia, Sudan, and South Sudan are more likely to be affected by possible wheat prices shocks as they are already facing internal socio-economic and climatic shocks–which have already led to high-food prices.

In case the conflict will prolong, there will be continuous disruption of wheat prices in the African continent with analysts projecting that it might likely be hard to keep up with the pace.

Even as most African countries continue to worry about the spike in commodity prices that is likely to dent growth, commodity markets are, however, on track for their biggest weekly gains in years.

Since Russia is one of the world’s biggest exporters of key raw materials, from gas and crude oil to aluminum and palladium, the exclusion of supplies from the country due to sanctions has sent traders and importers into a frenzy.

Commodities such as oil prices have spiked to their strongest weekly gain since the middle of 2020, with WTI up nearly 20 percent and Brent up 14 percent after hitting their highest levels in a decade this week.