Food, like crude oil, may witness an immediate impact from the ongoing Russia-Ukraine conflict, potentially leading to a risk of food inflation and food shortage across parts of the globe.

A spectacular rally in crop prices – from wheat to palm oil – has increased concerns that food costs are going to increase in the coming days. While the impact is at its peak in Europe, its immediate effects in the Middle East and the GCC are yet to be determined.

As per Bloomberg, both Russia and Ukraine are key suppliers of grains and edible oils (such as Sunflower oil) – and the crisis has driven the price of wheat to the highest levels since 2012.

The crisis is further accentuated as Ukraine and Russia account for about a quarter of the global trade in wheat, a fifth of corn sales, and 80 per cent of worldwide sunflower oil exports.

This comes on the heels of a South American drought that has dimmed the outlook for soya bean supplies. Meanwhile, palm oil, which is used in numerous products – from cookies to shampoo – is also on a record-breaking run as a labour shortage crimps output in major producer Malaysia.

As per Trading Economics, a website that archives trade statistics, the Sultanate imported roughly US$98.7mn worth of cereals and US$2.25mn worth of animal, vegetable fats, and oils from Russia in 2020.

This could result in inflation in the prices of consumables in the GCC, as items from pasta to chocolate become more expensive to produce and distribute as supply chains are disrupted.

The Russia-Ukraine crisis “represents a major concern for vegetable oil, wheat and corn,” said Oscar Tjakra, a senior analyst at Rabobank in Singapore. “We started 2022 from a position of low stocks in many agricultural commodities.”

Russian forces strategically hit cities in Ukraine after President Vladimir Putin ordered a multipronged operation. This sparked a rally across commodities on Thursday – February 24 – driving Brent crude oil above the US$100 per barrel mark for the first time since 2014 and sending Chicago wheat futures almost 6 per cent higher.