Prestige Purchasing is warning that the developing situation between Russia and Ukraine appears to be worsening: this could impact wheat prices in the months ahead. Meanwhile, drought and coffee rust damage is affecting coffee prices. Both will potentially impact foodservice companies in the UK.
Wheat supply from Russia and Ukraine
David Read, CEO of Prestige Purchasing comments:
“This week, tensions between Russia and Ukraine have escalated again. Analysts are suggesting that the situation is shifting toward a full-blown war, which could destabilise both nations and limit their ability to produce and export numerous commodities, especially wheat. Ukraine alone is expected to produce over 20 million tonnes of wheat this year.
“Both Russia and Ukraine are major global grain producers, together accounting for over a fifth of the world’s wheat exports. A serious conflict could hamper production, harvest, and transport of the grain, disrupting the flow onto the marketplace. Western nations have threatened increased sanctions against Russia, which could limit the available supply of wheat onto the global market as well.
Prices rising but ample global supply expected
“As a result of these fears, wheat prices rose to the highest level in three weeks, with September wheat touching $5.62 per bushel on Friday. Mid-term, even with a worsening conflict in Eastern Europe, many analysts expect the global supply to be ample, which could thankfully prevent a runaway market.”
Coffee prices at 3 month high
Coffee prices reached a three-month high last Thursday as traders reacted to increasing reports of drought-damaged coffee. Of primary concern is Brazil, which produces half of the world’s sought-after arabica coffee variety. Brazil is suffering from its worst drought in decades, which is reducing production estimates by nearly 20 percent.
Meanwhile, Central American producers like Guatemala, Costa Rica, and Honduras have been experiencing weather issues alongside a fungus known as coffee rust. These factors are cutting into Central American production as well, further reducing the flow of coffee onto the market.
As a result, coffee futures are trading near $2 per pound, a significant jump from the recent low of $1.60 in mid-July.
About Prestige Purchasing
Prestige Purchasing, is one of the UK’s leading specialists in procurement and supply chain management for the hospitality, catering, leisure, retail and private healthcare sectors.
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