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The Worsening of Ukraine and Russia Could Hit Supply Chains

As the Russia-Ukraine situation worsens, oil and gas prices are expected to rise even more, but the impact on energy will not be the only consequence. Analysts told CNBC that as the crisis worsens, supply lines will be impacted across the board, from wheat to barley, copper to nickel. is known as Europe’s “breadbasket,” and an invasion would impact the food supply chain “hard,” according to Alan Holland, CEO and founder of sourcing technology firm Keelvar.

According to observers, Russia and Ukraine are also major providers of metals and other commodities. Tensions between Russia and  have risen to new heights in recent days, after President Vladimir Putin’s order to send forces from the Kremlin into two pro-Russian separatist territories in eastern Ukraine. It came after he announced Russia will formally recognise Donetsk and Luhansk’s independence.

The Worsening of Ukraine and Russia Could Hit Supply ChainsOn Tuesday, US Vice President Joe Biden described Russia’s actions as the start of a “invasion” of . Analysts say Ukraine produces wheat, barley, and rye, which are important crops in Europe. It’s also a major corn grower. Despite the fact that harvest season is still a few months away, a prolonged conflict this fall would result in bread shortages [and higher consumer prices]. In reality, several countries in the Middle East and Africa rely on Ukrainian wheat and corn, and disruptions in that supply could jeopardise food security in those regions.

Prices for wheat and grain were already skyrocketing. Wheat futures in Chicago have increased by around 12% since the beginning of the year, while corn futures have increased by 14.5 percent. Food inflation has been rising, and if an armed conflict breaks out, it could get even worse. Additional price shocks would only worsen rising food prices, especially if Russian loyalists control key agricultural areas in Ukraine. He also mentioned that Russia is the world’s leading wheat exporter.

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