Bulk wheat orders offer 3-month price reprieveWednesday November 02 2022
Kenyan consumers should brace for a fresh rise in wheat products should the Russia blockade of grains from Ukraine through the Black Sea persist beyond January.
The exports of the grain from Ukraine were halted after Russia moved back on an agreement that had allowed the shipments of the commodities through the Black Sea, blamed on attacks on its ships in Crimea region.
But millers in Kenya say the country is covered till January given that processors had received wheat orders expected to last next three months at the current cost.
“There is a lot of wheat coming in and there is still more in the high seas. I am not foreseeing a situation where the price of wheat products will rise beyond the current cost in the next three months,” said Bimal Shah, chief executive officer Broadway Group of Companies.
Millers do upfront buying of wheat from the international market and the grain they have purchased so far will protect consumers from the shocks that may be caused by the current stalemate.
However, should Russia fail to revert to the agreement, Kenya will feel the pinch of the expected high prices that would have been occasioned by the blockade of grain from February next year.
The agreement allowing Ukraine to resume its Black Sea grain exports was brokered by the United Nations in July, allowing the country to resume shipping of agricultural commodities along the channel.
The corridor had been blocked when Russia invaded the Kyiv.
The deal to unlock grain exports signed between Russia and Ukraine and also brokered by Turkey, was critical to easing the global food crisis caused by the conflict.
The deal is due for renewal later this month but Russia has not given an assurance of whether it will renew it or not.
"The Russian side cannot guarantee the safety of civilian dry cargo ships participating in the 'Black Sea Initiative', and suspends its implementation from today (Saturday) for an indefinite period,” said Russia’s Foreign Ministry.
International price of wheat jumped marginally to 8.78 US cents per bushel on Monday from 8.28 cents on Saturday, marking a two-week high. The cost of the grain had started easing following the truce in July.
The price of wheat started skyrocketing at the end of February after Russia invaded Ukraine, hitting a high of $13 per bushel.
Kenya received the first ship of wheat from Ukraine two weeks ago, marking the maiden consignment since the war broke out in February. The country has mainly been receiving wheat from Canada, Australia and Latvia.
The two countries account for over a third of the world’s total wheat with any disruption in supply having serious ramifications on countries that rely on imports to bridge their deficits.