Back to Posts


February 25, 2022

With Russia’s invasion of Ukraine becoming a reality this week, lawmakers worry that disruptions to Ukrainian grain exports that help feed large portions of the developing world could drive up global food prices and spark social unrest, report our Doug Palmer, Meredith Lee and Ximena Bustillo.

“We’re quite concerned that it would be a huge disruption to the global supply chain,” a senior Senate Republican aide tells them. “Since Ukraine produces so much wheat and the World Food Program buys so much, it would be pretty catastrophic.”

More from Meredith and Ximena: “As U.S. officials had feared, Ukraine — known as the ‘breadbasket of Europe’ for its sprawling wheatfields — closed its ports on Thursday amid the invasion. The conflict is already driving up prices for grains from the U.S., which is also a major exporter. Lower estimated yields from South America are also helping to push up prices.

“Wheat futures prices at the Chicago Board of Trade, the global benchmark, surged 6 percent earlier this week, to about $9.34 a bushel, the highest in nine years. Wheat futures are up 10 percent since the start of the year. USDA Chief Economist Seth Meyer warned during the department’s Outlook Forum on Thursday that the conflict could have global economic and trade implications.

“Together, the two countries account for almost a quarter of global grain exports,” Meyer said.

MESTER STILL SEES MARCH HIKE AS APPROPRIATE — Bloomberg’s Olivia Rockeman: “Federal Reserve Bank of Cleveland President Loretta Mester said that barring an ‘unexpected turn in the economy,’ she still supports kicking off a series of interest-rate hikes in March, and starting to reduce the size of the central bank’s balance sheet soon.

“‘There are risks and uncertainty around the outlook, including those engendered by the geopolitical events unfolding today,’ Mester said in prepared remarks for an event Thursday hosted by Lyons Companies and the University of Delaware. Asked after the speech how the Ukraine crisis will affect policy decisions, Mester said, ‘I don’t think it changes the need of the Fed to remove accommodation from the emergency levels’ it currently has.”