How Russia’s attack on Ukraine could hit supply chains
As the Russia-Ukraine crisis escalates, Oil and gas prices will spike further. The influence on energy won’t be the only ramification.
Analysts tell CNBC that supply chains would appear disrupted as the crisis worsens from wheat and barley to copper and nickel. Analysts regard Ukraine as the breadbasket of Europe.
CEO and founder of sourcing technology company Keelvar Alan Holland said that an invasion would disrupt the food supply chain. Analysts said that Russia and Ukraine are also significant metals and other commodities suppliers.
Uncertainties between Russia and Ukraine reached a fever rise in the last few days as Putin ordered its forces into two pro-Russian separatist regions in eastern Ukraine. It happened after he said Russia would formally recognize the independence of these two regions: Donetsk and Luhansk.
President Joe Biden said on Tuesday that Russia’s actions in Ukraine appeared to be the apparent beginning of an invasion, and the United States and its allies would respond. He said the United States and its allies would respond, but he gave no details. The comments reflected the administration’s increasingly hawkish stance toward Russia, which has faced international condemnation for its incursion into Ukraine.
Overview of Russia’s invasion and the potential agricultural crisis
Analysts said that Ukraine is a major producer of wheat, corn, barley, and rye, which much of Europe relies on. It’s also a significant producer of corn, a primary feedstock for ethanol and animal feed. These agricultural commodities are a substantial part of its economy, employing millions of people and making up a significant portion of its exports.
The country is also a key supplier of agricultural commodities to Europe. This means that the disruption of its grain exports would have a ripple effect.
Holland said a prolonged conflict would create bread shortages this fall even though harvesting season is still a few months away. He added that it could also increase consumer prices.