Russian invasion of Ukraine had blocked access to the lower-cost Black Sea grains supplies that Ukraine had always relied on. Wheat exporters are now facing a threat to provide and deliver politically sensitive bread supply across the Middle East and North Africa (MENA).
The ongoing conflict has shut down transportation from Ukraine’s ports, while punitive measures have put payments for Russian wheat purchases in jeopardy, according to traders and bankers, adding to the risk for governments in the MENA region already dealing with high import costs, economic crises, and conflict.
‘Everyone is searching for other markets since buying stocks from Ukraine or Russia is getting increasingly difficult,’ a Middle Eastern commodities banker said, citing shipping disruptions, mounting sanctions, and increased insurance rates as reasons.
‘Until the conflict stops, the market does not expect Ukrainian and Russian shipments to restart,’ one merchant stated.
Switching to alternate origins is costly because of growing worldwide pricing and export restrictions, while water scarcity and rising input costs limit alternatives for boosting local production in the MENA region.