Decreased Grain Exports from Ukraine Unlikely to Impact Long-Term Global Prices

Concerns have been growing over how the ongoing political turmoil in the Ukraine, the world's third largest maize exporter, could impact global grain prices and reserves in the coming year. While Ukraine has delivered the majority of its current export obligations, continuing conflict could pose problems for next season's planting and harvest, and thus future export shipments. According to an article published by IRIN News, however, experts do not foresee a long-term impact on global grain prices.

Abdolreza Abbassian, an economist with the Food and Agriculture Organization and the Secretary of the G20 Agricultural Market Information System (AMIS), explains that while prices of both wheat and maize have risen in recent weeks as a response to the ongoing situation in the Ukraine, these increases are purely speculative. Maize and rice prices remain significantly lower than they were at this time last year, although wheat prices are 2 percent higher than 2013. Abbassian does emphasize that prices and reserves do warrant close monitoring, and AMIS continues to watch the situation. If prices begin to get out of control, AMIS's Rapid Response Group could step in and respond.

Maximo Torero, Director of the Markets, Trade and Institution Division at IFPRI, also weighed in, saying that he does not believe there is any cause for alarm. Even if exports from the Ukraine slow in the coming months, other countries - such as Australia, the US, and Brazil - are in a good position to step in and cover the gap. While there may be a small short-term increase in global grain prices, Torero expects any price rise to smooth relatively quickly.