April 26, 2022 - The International Trade Council (ITC) is concerned about the impact of the Ukraine-Russia war on global commodity prices, with the World Bank forecasting the "largest commodity shock" since the 1970s. The ITC acknowledges the warning from the World Bank and is supportive of Ukraine as it faces this challenging situation.
The conflict has disrupted global supply chains, leading to a significant increase in prices of essential goods ranging from natural gas to wheat and cotton. Energy prices are expected to rise over 50%, with natural gas prices in Europe more than doubling in cost. Furthermore, disruptions resulting from the war are expected to have a lasting negative effect on the oil industry, with foreign companies leaving Russia and access to technology being reduced.
In addition to energy prices, food prices have risen significantly. Wheat is expected to increase by 42.7%, while chicken prices are expected to rise by 41.8%, due to a drastic fall in exports from Ukraine and Russia. Before the war, the two countries accounted for 28.9% of global wheat exports and 60% of global sunflower supplies.
The ITC is concerned about the impact of rising commodity prices on the global economy and, in particular, the poorest households, which spend a larger share of their income on food and energy. The Council recognizes that other countries can help solve the supply shortage caused by Ukraine's war in the medium term. However, the ITC is mindful of the need for investment in the agricultural sector to maintain global food supplies and minimize the adverse impact of price hikes on the world's most vulnerable.
The ITC urges governments, international organizations, and other stakeholders to come together and find ways to mitigate the impact of the Ukraine-Russia war on global commodity prices. The Council also stands in solidarity with Ukraine and hopes for a swift resolution to the conflict.