It was the “year of extremism,” “out of the ordinary,” and “exceptional.”
Geopolitical developments controlled the movement of the global grain market in 2022
Putin applied what is known as "grain diplomacy".
A.F.B
The wheat market witnessed a significant increase in prices during 2022. Reported by the World Economic Forum
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The year 2022 witnessed the global grain market entering an era of uncertainty, in light of a war that shook the European continent and exposed the fragility of global food systems.
Analysts of this market consider that this year was a “year of extremism”, “out of the ordinary” and “exceptional”, expecting that strong fluctuations will continue in 2023 and that prices will be supported by the return of imports from China, which has begun to lift restrictions to combat the “Covid-19” outbreak. .
Also in the year 2022, wheat prices - and therefore bread prices - witnessed great fluctuations, in light of the war in Ukraine and in an already tense context with the global economy trying to recover after the receding of the “Covid-19” outbreak, which had caused a rise in energy and fertilizer prices.
The world managed to avoid the worst in 2022, after the United Nations predicted "famine hurricanes", but the global bill for food imports is expected to rise by 10% in 2023, according to the Food and Agriculture Organization of the United Nations (FAO).
The latter indicates that poor countries, led by sub-Saharan African countries, "will pay more for less."
the accumulation of uncertainties
The war in Ukraine, a major agricultural power that was about to restore its historical role as a warehouse for the world's grain, shuffled the cards, as the world was facing a new crisis of its kind, after it had faced the crises of 2008 and 2010-2011, the cause of which was mainly financial.
According to an analytical study by the UBS bank, "This war alone has endangered more than a quarter of the world's grain trade, prompting many countries to protect their domestic food supplies by limiting exports," such as India.
The war in Ukraine also highlighted the "fragility of the global food system".
In the European market, the price of a ton of wheat at the beginning of the year was 270 euros, to rise during the year and reach about 315 euros at the end of December, which is equivalent to an increase of about 17% on an annual basis that obscures “exceptional fluctuations with a peak of 438 euros on May 16,” while Trade was almost completely stopped in the Black Sea, according to an analyst at the company "Agritel", Artur Portier.
He explained that “these fluctuations are linked to the accumulation of uncertainties,” with the agricultural markets moving from 99% of them climatic risks, to health uncertainties associated with the outbreak of “Covid-19” or bird flu, and geopolitical uncertainty as a result of the war in Ukraine, in addition to Unrest in the field of energy, with the continued rise in fuel and fertilizer prices, and in the field of macroeconomics, with fear of a global recession.
Tensions eased in July after a Ukrainian grain export agreement allowed 15 million tons of grain and seeds to be released from Ukrainian silos.
The situation in Ukraine remained the only driver of the market for months, after Russian President Vladimir Putin imposed "grain diplomacy" in an attempt to link the fate of the Black Sea trade to a partial lifting of international sanctions targeting his country.
2023 is another year of ups and downs
While Western Europe was suffering from a heat wave, Russia performed well, as it recorded an exceptional harvest of about 100 million tons of wheat, according to estimates by a number of analysts, at a time when Ukraine lost a quarter of its agricultural lands due to the war, and its grain production decreased by 40%.
On paper, global wheat stocks reached their highest levels in exporting countries, but “35% of stocks today are in Russia,” according to Portier, who believes that this strengthens Russia’s position in the event of a major weather accident with another major exporter.
In the year 2022, the US markets suffered from an increase in the price of the dollar and a sharp slowdown in the demand of China, which is usually thirsty for soy and corn.
Michael Zozolo, head of Global Commodity Analytics and Consulting, says that if the Chinese recovery is confirmed, and the US central bank adheres to “greater neutrality” by stopping raising key interest rates, “the material bubble will inflate slightly and investment funds will buy commodities.” more of them.”
UBS analysts believe that “2023 will be another year of fluctuations” because “grain prices do not adequately reflect the level of climatic and geopolitical risks,” as markets faced - perhaps very quickly - the risks associated with the Ukrainian conflict and the El Niño climate phenomenon.
• In 2022, wheat prices, and therefore bread prices, witnessed great fluctuations in light of the war in Ukraine, and in a tense context mainly with the global economy trying to recover after the receding of the "Covid-19" outbreak, which had caused a rise in energy and fertilizer prices.
• The world was able to avoid the worst in 2022, after the United Nations predicted "famine hurricanes", but the global bill for food imports is expected to rise by 10% in 2023, according to the Food and Agriculture Organization of the United Nations (FAO).
• The war in Ukraine, a major agricultural power that was about to restore its historical role as a warehouse for the world's grain, shuffled the cards, as the world is facing a new crisis of its kind, after it had faced the crises of 2008 and 2010-2011, the cause of which was mainly financial.
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