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World Bank says Ukraine war may prompt grain shortages in poor countries -Breaking


© Reuters. FILE PHOTO – Wheat ears are seen near Hrebeni, Kyiv Region Ukraine. July 17, 2020. REUTERS/Valentyn Ogirenko

By David Lawder

WASHINGTON (Reuters), Wednesday: The World Bank stated that a large number of developing nations are in danger of short-term supply problems due to their dependency on Ukrainian wheat imports, which have been interrupted by Russia’s invasion.

According to the World Bank’s latest Trade Watch Report, Gambia (Lebanon, Moldova, Djibouti and Libya are most vulnerable to disruptions in wheat exports from Ukraine. These countries import roughly 40% of their wheat.

The World Bank stated that “these importers will face difficulty quickly switching to other sources, potentially leading to short-term supply shortages,”

Russia has imposed export restrictions on wheat and other cereal grain to non-member countries of the Eurasian Economic Union. This has made it more difficult for farmers.

According to World Bank data, Russia was 2018’s top exporter of wheat and Ukraine fifth. Together, the two countries account for about 25% of global exports.

While sanctions imposed by the West on Russia for its invasion in Ukraine don’t specifically target Russian grain exports; however, sanctions prohibiting dollar and euro transactions at top Russian banks makes trade finance more difficult.

According to a World Bank report, out of the shortages in Ukraine’s main grain clients, high market prices for wheat could also affect middle income countries all over the globe.

The United Nations Food and Agricultural Organization’s Cereal Price Index in February was up 14.8% from a year earlier, and the World Bank said wheat futures prices had surged 60% since the start of the conflict.

The bank stated that disruptions in wheat exports will also affect the markets for rice and corn, which are substitutes for wheat, which can benefit net exporters while hurting net importers.

The World Bank stated that disruptions caused by war in Ukraine could also hinder a robust global trade recovery for 2021. Global trade in goods and services is now at an all-time high, surpassing pre-pandemic levels.

The World Bank reported that overall trade rose by 26% over the 2020 level and 17% over 2019, with trade values surpassing 2019 in all regions except transportation equipment.

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