TIMES.KY

Cayman Islands, Caribbeanand International News
Monday, Mar 04, 2024

Ukraine war to cause biggest price shock in 50 years: World Bank

Ukraine war to cause biggest price shock in 50 years: World Bank

The war in Ukraine is set to cause the "largest commodity shock" since the 1970s, the World Bank has warned.
In a new forecast, it said the disruption caused by the conflict would contribute to huge price rises for goods ranging from natural gas to wheat and cotton.

The increase in prices "is starting to have very large economic and humanitarian effects", Peter Nagle, a co-author of the report, told the BBC.

He said "households across the world are feeling the cost of living crisis".

"We're particularly worried about the poorest households since they spend a larger share of income on food and energy, so they're particularly vulnerable to this price spike," the senior economist at the World Bank added.

Energy prices are set to increase more than 50%, pushing up bills for households and businesses, the World Bank says.

The biggest rise will be in the price of natural gas in Europe, which is set to more than double in cost. Prices are forecast to fall next year and in 2024, but even then will remain 15% higher than they were last year.

The World Bank said this means that from the lows of April 2020 until the highs of March this year we have seen "the largest 23-month increase in energy prices since the 1973 oil price hike", when tensions in the Middle East sent prices soaring.

Similarly, oil prices are expected to remain elevated into 2024 with a barrel of the benchmark measure, Brent Crude, projected to average $100 this year, something which will lead to widespread inflation.

Russia produces about 11% of the world's oil, the third biggest share, but the report said "disruptions resulting from the war are expected to having a lasting negative effect" as sanctions mean that foreign companies leave and access to technology is reduced.

Russia currently provides 40% of the EU's gas and 27% of its oil, but European governments are moving to wean their countries off of supplies from Russia. That has helped push up global prices by creating more demand for supplies from elsewhere.

The World Bank commodity outlook also warned many foods are set to see steep rises in their costs. The UN food prices index already shows they are at their highest since records began 60 years ago.

Wheat is forecast to increase 42.7% and reach new record highs in dollar terms. Other notable increases will be 33.3% for barley, 20% for soybeans and 29.8% for oils and 41.8% for chicken. These increases reflect the fact that exports from Ukraine and Russia have fallen drastically.

Before the war the two countries accounted for 28.9% of global wheat exports according to JP Morgan, and 60% of global sunflower supplies - a key ingredient in many processed foods - according to S&P Global.

Prices for other raw materials including fertilizers, metals and minerals are also predicted to go up. The costs of timber, tea and rice are among the few expected to fall.

"Wheat is one of the hardest agriculture exports to replace," according to a research note from the Bank of America. It points out that poor weather conditions in North America and China are likely to exacerbate the impact of Ukrainian supplies being reduced, something which will continue because the war has disrupted the spring planting season.

The note also suggests grain and oilseed shipments from Ukraine have fallen more than 80% because of the fighting and these lost exports, over the course of a year, "equate to about 10 days of world food supply".

The chief executive of Archer Daniels Midland, one of the world's four big food commodity traders, said he does not expect prices to come down soon.

As the US firm announced a 53% increase in net earnings for the first three months of this year, to $1.05bn, Juan Luciano said: "We expect reduced crop supplies - caused by the weak Canadian canola crop, the short South American crops, and now the disruptions in the Black Sea region - to drive continued tightness in global grain markets for the next few years".

Nagle, from the World Bank, said other countries can help solve the supply shortage caused by Ukraine's war in the medium term. However, a forecast 69% increase in fertilizer prices this year means "there's a real risk that as farmers start to use fewer fertilizers, agricultural yields will decline".

For commodities overall, the World Bank report said: "While prices generally are expected to peak in 2022, they are to remain much higher than previously forecast."

It added that "the outlook for commodity markets depends heavily on the duration of the war in Ukraine" and the disruption it causes to supply chains.
Newsletter

Related Articles

TIMES.KY
0:00
0:00
Close
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Israel: Unprecedented Civil Disobedience Looms as IDF Reservists Protest Judiciary Reform
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
Europe is boiling: Extreme Weather Conditions Prevail Across the Continent
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Italian Court's Controversial Ruling on Sexual Harassment Ignites Uproar
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
BBC Personalities Rebuke Accusations Amidst Scandal Involving Teen Exploitation
A Swift Disappointment: Why Is Taylor Swift Bypassing Canada on Her Global Tour?
Historic Moment: Edgars Rinkevics, EU's First Openly Gay Head of State, Takes Office as Latvia's President
Bye bye democracy, human rights, freedom: French Cops Can Now Secretly Activate Phone Cameras, Microphones And GPS To Spy On Citizens
The Poor Man With Money, Mark Zuckerberg, Unveils Twitter Replica with Heavy-Handed Censorship: A New Low in Innovation?
Unilever Plummets in a $2.5 Billion Free Fall, to begin with: A Reckoning for Misuse of Corporate Power Against National Interest
Beyond the Blame Game: The Need for Nuanced Perspectives on America's Complex Reality
Twitter Targets Meta: A Tangle of Trade Secrets and Copycat Culture
The Double-Edged Sword of AI: AI is linked to layoffs in industry that created it
US Sanctions on China's Chip Industry Backfire, Prompting Self-Inflicted Blowback
Meta Copy Twitter with New App, Threads
The New French Revolution
BlackRock Bitcoin ETF Application Refiled, Naming Coinbase as ‘Surveillance-Sharing’ Partner
×