Russia and Ukraine are responsible for a significant portion of the world’s wheat and corn.
“It’s created quite a bit of volatility in the market, just the anticipation that something could happen,” said Louise Gartner of Spectrum Commodities, of global wheat prices. “There are always going to put in some risk premium yet for an event that looks like it’s going to happen just in case.”
While global wheat prices have fluctuated, a more significant cost to Americans may come from a spike in corn costs. Corn is used in many foods and feeds animals, which would raise overall meat prices.
“We’re already seeing increased demand coming here for the United States corn,” said Gartner. “That much more directly affects your meat prices and in its beef, hogs, chicken — primarily beef and chicken.”
The Labor Department reported earlier this month that its “food at home index” already rose 6.5% over the past year, the largest annual increase in the past decade. Prices for meat, chicken, fish and eggs rose even more, increasing 12.5% over the year, according to the department’s data.
The global economic consequences of an invasion of Ukraine go beyond more expensive steak and eggs. War in the region would disrupt commerce and so would retaliatory sanctions against Russia’s economy.
“Because Russia is a major commodity exporter. Because Ukraine is also a not small exporter of certain commodities like iron and steel products,” said Chris Miller, an assistant professor of international history at The Fletcher School at Tufts University. “Any war would have price effects on all of those commodities that are sold globally.”
Russia is a major energy supplier, especially in Europe. Russia accounts for about a third of Europe’s natural gas.
“If there were an all-out war or whatever and diplomacy fails and a rapprochement doesn’t go through, we’re probably looking at cut-off natural gas, which we’ve already seen ballistic prices for in Europe at the beginning of the year. And we’re looking at perhaps losing about two million barrels a day of crude,” said Tom Kloza, the Global Head of Energy Analysis for Oil Price Information Service. “So it would be a big, big deal, and it could send prices up.”
Retail gas prices in the United States are up nearly a dollar per gallon from a year ago, according to the U.S. Energy Information Administration. Any future price increases for energy, food or household products would depend on whether an invasion actually happens, the length of any conflict, and the severity of sanctions from the U.S. and Western Europe.