Just 10 Weeks’ Worth Of Wheat Left In The Global Reserves

By Lynnet Okumu / Published May 24, 2022 | 12:57 pm




KEY POINTS

Wheat prices have shot up from about 39 295 per ton to 52,394 shillings per ton, with a kilo of wheat now ranging between 21.86 shillings and 48.32 shillings, it is projected to rise even further in the coming months.


Wheat prices

KEY TAKEAWAYS


A two-kilo packet of Ajab has shot from 168 sometime last month to retail at 182 shillings. Pembe and Exe for the same quantity are selling at 177 and 172 shillings respectively at Naivas Supermarket.


According to a food supply expert, Sarah Menker, 10 weeks of wheat are all that the global Reserves hold.

“We currently only have 10 weeks of global consumption sitting in inventory around the world. Conditions today are worse than those experienced in 2007 and 2008,” Menker said.

Menker who is the CEO of agriculture analytics firm Gro Intelligence, affirmed that this is a seismic situation that would not resolve immediately even if the European war were to end tomorrow.

She was echoing a warning issued by the president of Ukraine Volodymyr Zelenskyy concerning the same.

“Russia has blocked almost all ports and all, so to speak, maritime opportunities to export food – our grain, barley, sunflower, and more. There will be a crisis in the world. The second crisis after the energy one, which was provoked by Russia.” President Zelenskyy warned.

The Ukraine Russia war has entered the fourth month now, has threatened a big portion of the world’s wheat supply, and has sent prices on a dizzying ride to new highs and the sharpest weekly drop in years.

The war coupled with other major challenges occurring simultaneously and are each individually extraordinary is likely to cripple many economies across the globe.

Lack of fertilizer, climate disruptions, record low inventories in cooking oils, record low inventories of grains, and logistical bottlenecks are among the threats already unraveling decades of global economic progress according to Menker.

Without substantial immediate and aggressive coordinated global actions, the world stands the risk of an extraordinary amount of both human suffering and economic damage. This isn’t cyclical, it is seismic. It’s a once-in-a-generation occurrence that can dramatically reshape the geopolitical error.

Russia and Ukraine provide nearly a third of the world’s wheat exports and are in the top five exporters of corn globally. The two countries export 75 percent of global sunflower oil supplies.

As of now, all Ukrainian ports are closed, making it impossible to move any of her harvested grain across its borders. Moving by rail will move less than 10 percent of the prewar flow, which is not enough.

Meanwhile, Russian exports, which also include fertilizer, are limited because of the Black Sea maritime hazards.

In the global market, wheat prices surged to a record high on Monday after India decided to ban exports of the commodity as a heatwave hit production.

Benchmark futures in Chicago rose as much as 5.9 percent to 1,453.96 shillings a bushel, the highest in two months and within about $1 of the all-time high set just after Russia’s invasion. In Paris, milling wheat rose 5.1 percent to 431.75 euros ($450) per ton, a record for most-active futures.

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

Now, because most African Countries largely depend on the wheat imports from the two nations, the severe effect of the fallout of the ongoing conflict is already affecting countries such as Kenya where 90 percent of food consumed comes from Russia and Ukraine according to data from Agriculture and Food Authority.

You can imagine what has been happening now that it cannot get the imports from the two countries. Shortages and hiked prices.

Wheat prices have shot up from about 39 295 per ton to 52,394 shillings per ton, with a kilo of wheat now ranging between 21.86 shillings and 48.32 shillings, it is projected to rise even further in the coming months.

The commodity’s price has already made bread and other wheat products a commodity for just a few.

A two-kilo packet of Ajab has shot from 168 sometime last month to retail at 182 shillings. Pembe and Exe for the same quantity are selling at 177 and 172 shillings respectively at Naivas Supermarket.






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