Because the war between Russia and Ukraine will raise the price of wheat
Immediately after Russia's attack on Ukraine, grain prices reached their 9-year high. The position of Italy and the scenarios on the prices of pasta and bread. Facts, numbers, alarms and forecasts
One of the many side effects of the war in Ukraine, from an economic point of view, is the increase in the price of wheat and, in perspective, also of all the products derived from it such as pasta and bread. This has repercussions and will inevitably have repercussions also in Italy since, according to Coldiretti data, we import 64% of them.
Russia and Ukraine, among other things, are among the largest producers of the raw material. They represent, in fact, almost a third of the world trade in wheat.
SOFT WHEAT AND DURUM WHEAT
Durum wheat, that of pasta, for now maintains a stable price because, explains the Corriere della Sera , the percentage of imports is lower than that of soft wheat, used for pastry, which instead undergoes a significant increase due to the war.
INFLATION ALARM …
A chain reaction that would then lead to an increase in inflation. For Confesercenti , the increase in the prices of imported raw materials and energy could, in fact, bring the inflation rate to 6% in 2022, resulting in lower consumption for 4 billion euros.
"Following the start of military operations, – writes Ansa – energy prices have recorded a further rebound, with prices that compared to the beginning of the year now mark increases of 27% for oil and 52.4% for the gas. An upward push that also extends to wheat, the price of which has increased by 11% ".
… AND THE CONSEQUENT POLITICAL INSTABILITY
“A situation – comments Coldiretti – which in the more developed countries is fueling inflation; but for the poorest there is the risk of political stability waning, with wheat prices at the same levels reached in the years of the dramatic bread riots that involved many countries starting from North Africa such as Tunisia, Algeria and Egypt, which is the world's largest importer of wheat and depends above all on Russia and Ukraine ”.
HOW MUCH WHEAT ITALY IMPORTS
Italy is highly dependent on Russia and Ukraine for imports of soft and durum wheat. This is underlined by the Istat data processed by the Confagricoltura research office: from January to November 2021, we imported 122 thousand tons of soft wheat from Ukraine and 72 thousand from Russia, of which 51 thousand of durum wheat.
This, reads the Corriere , “means that the two countries represent about 5% of the total Italian imports of soft wheat (2.5% for durum wheat). And in 2020 the percentage was even higher: 6.6% (1.5% of durum wheat) ".
WHY DOES ITALY IMPORT SO MUCH?
To this question, Coldiretti replied that "Italy is forced to import agricultural raw materials due to the low remuneration paid to farmers […] because many industries for myopia have preferred to continue to buy for years speculatively on the world market, rather than guaranteeing supplies with national products through supply chain contracts ".
HOW MUCH THE PRICES HAVE ALREADY INCREASED
Agricultural Consortia of Italy (CAI) has made it known that after not even a week of war the cost of soft wheat has undergone a 13% increase from 274 euros per ton to the current 310 euros per ton.
Coldiretti said that, in the single day of February 24, immediately after Russia's attack on Ukraine, wheat prices jumped by 5.7%, reaching a 9-year peak at $ 9.34 a bushel.
According to Cai estimates, the price of agricultural products strictly dependent on imports from Russia and Ukraine is destined to rise further, while at the moment there are no changes in durum wheat, whose prices are mainly affected by the lack of production in Canada and by the rise in prices. production costs.
THE PRICE OF THE PASTA WILL GO UP HOWEVER
Despite the forecasts of the CAI, the experts recall that even the price of durum wheat, although not in an alarming way, is not protected from increases. “In 2021 – Vincenzo Divella, CEO of the Apulian company of the same name, told Corriere – the price of durum wheat almost doubled. And in 2022 the price increases are related to electricity, which has increased up to 200%, and gas, up to 600%. This is why I say that the price of pasta will also increase, because in addition to energy, cartons and sea freight costs more ”.
How much will it increase? "Let's say that after the 15% increase in 2021, I expect another 20 cents more per kilogram soon, which means 10 cents more per package, equal to a price increase of about 10%". This is the estimate of Divella, which due to the blockade of the Black Sea ports, a crucial logistical hub, has a ship there with a load of 30,000 quintals of soft wheat.
According to Il Sole24Ore , among other things, "the cargo ships remaining in the area risk being bombed: three have already been hit since last Thursday, fortunately without victims".
THE ASSUMPTIONS OF THE ASSOCIATIONS ON THE INCREASE IN THE PRICES OF BREAD AND PASTA
Associations such as Assoutenti, Federalimentari and Assopanificatori-Fiesa Confesercenti are no longer optimistic about the rise in prices.
Pasta – Assoutenti points out – which already in January suffered an increase of 12.5%, could cost 30% more than last year. The price of bread, which rose 3.7% last month, could experience increases of 10%.
Federalimentari also believes that the cost of pasta could exceed 10% and for Assopanificatori-Fiesa Confesercenti the same is true for bread but the estimated increase, they underline, is subject to various variables, including the increase in energy and gas. which impacts on the operation of machines and ovens.
Coldiretti reported that the price of fresh bread on average has already increased in January by 3.8% compared to the same month of the previous year.
THE CONSEQUENCES OF THE SANCTIONS
Il Sole24Ore also believes that among the names of the banking institutions that will be affected by the sanctions it is very likely that there is also Vtb Bank, "a giant in the cereals sector, not only for trade credit activities, but also through shareholdings with which it controls important export infrastructures ".
THE FORECASTS OF THE ANALYSTS
"Wheat futures traded in Chicago jumped 12% last week to the highest level since 2012," writes the Corriere and adds that for analysts "it is too early to know how long the impact on supply chains will last. conflict in Ukraine ".
According to them, in fact, "the effects of the war and sanctions are not yet clear" since "many companies can rely on stocks of components and raw materials and Ukrainian wheat is mainly exported after the harvest starting in August".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/perche-la-guerra-fra-russia-e-ucraina-fara-lievitare-il-prezzo-del-grano/ on Tue, 01 Mar 2022 11:38:31 +0000.