Ukraine war and European drought push global food prices up

Global food prices face fresh upward pressure as the Russia-Ukraine war disrupts Black Sea grain shipping and extreme summer heat reduces European crop output. A large Ukrainian drone attack on Tuesday damaged two major Russian grain export terminals at the port of Novorossiysk, halting operations. The terminals have a combined annual capacity of 15.6 million tonnes, Reuters reports.

Russia and Ukraine together account for 27.4 per cent of global wheat exports. Ukraine has stepped up attacks on grain vessels since mid-July, while Russia has targeted Ukrainian port facilities around the Odesa region. The US Department of Agriculture projects EU wheat production will fall 7.5 per cent and maize output to its lowest level in nearly two decades.

The Food and Agriculture Organization's benchmark food price index hit a three-and-a-half-year high in July. Corn and wheat prices on the Chicago Board of Trade rose 4-5 per cent since the attacks. Ukraine's Agriculture Ministry has cut its forecast for farm exports in 2026-27 from 64.4 million tonnes to 29.6 million tonnes.