International oil prices have stabilized on the expectation of an increase in production by the Organization of Petroleum Exporting Countries (OPEC) plus (+), but concerns about rising prices of major food items such as wheat and corn are expected to increase. This is because the Ukrainian government banned food exports to stabilize its own supply and demand after Russia’s attack showed signs of prolongation. While the Western economic sanctions against Russia are getting stronger, Russia is showing off its health and is preparing a response system, but it is evaluated that the shadow of default (default) is getting darker.
According to CNN on the 9th, the Ukrainian government held a cabinet meeting and passed a resolution banning the export of major grains such as wheat, corn, salt, oats, buckwheat and millet. Ukraine’s Agriculture and Food Minister Roman Reshchenko said: “The export ban is necessary to prevent a humanitarian crisis in Ukraine, to stabilize markets and to meet people’s demand for important food.” The move in Ukraine has fueled concerns about rising prices of key food items. In fact, the price of international wheat futures trading today was $11.1 per bushel (bu), up 41.2% from the previous month. “After the Russian invasion of Ukraine, wheat prices soared, reaching prices not seen since 2008,” CNN reported.
While the intensity of Western sanctions against Russia is also increasing, Russia is emphasizing a decisive response, saying it will “stand up to an economic war.” However, the possibility of default is gradually increasing. In fact, while JP Morgan warned of the possibility of Russia’s first default on the 16th, the world’s three largest credit rating agencies, including Fitch and Moody’s, all downgraded Russia’s national credit rating to ‘on the verge of bankruptcy’.
The economic situation inside Russia is also getting worse. In particular, as the ruble fell by nearly 90% compared to the beginning of the year and the cost of living rose by 30%, the Russian House of Representatives committee announced on the same day that it would propose a government price control bill for daily necessities. Not only food, but also construction materials, fertilizers, agricultural machinery, and pharmaceuticals are expected to be targeted. Russia’s national car ‘Lada’ plant also stopped operating. This is because the procurement of key components such as semiconductors has been blocked due to international sanctions.
Reporter Im Jeong-hwan yom724@munhwa.com
