Global food prices face fresh risks from Ukraine war, European drought

The intensifying Russia-Ukraine war and extreme summer weather in Europe are putting fresh upward pressure on international food prices, with disruptions to Black Sea shipping threatening the movement of grain from two of the world’s major agricultural exporters.

On Tuesday, a large Ukrainian drone attack damaged two of Russia’s biggest grain export terminals at the Black Sea port of Novorossiysk, forcing the suspension of operations. The two terminals have a combined annual export capacity of 15.6 million tonnes, according to a Reuters report.

Ukraine has also stepped up attacks on grain vessels, maritime infrastructure and ports in the Sea of Azov and the Kerch Strait since mid-July. The attacks have restricted the movement of Russian agricultural produce through ports including Rostov-on-Don, Taganrog, Taman, Kavkaz and Novorossiysk.

Russia has meanwhile targeted Ukrainian port facilities and vessels around the Greater Odesa region. The three deep-water ports of Odesa, Chornomorsk and Pivdennyi handle around 90 per cent of Ukraine’s agricultural exports.

The disruptions come as Europe faces excessive heat and dry conditions that are expected to reduce crop production and increase the European Union’s need for grain imports.

Wheat, maize production falls

The US Department of Agriculture has projected EU wheat production to fall 7.5 per cent, from 145.1 million tonnes in 2025-26 to 134.2 million tonnes in the current marketing year.

EU maize production is projected to decline from 56.8 million tonnes to 50.2 million tonnes, its lowest level in nearly two decades. Barley production is expected to fall from 56.4 million tonnes to 52.3 million tonnes, while oats are projected to decline from 8.9 million tonnes to 8 million tonnes and rye from 7.7 million tonnes to 7.2 million tonnes.

The combination of lower European production and disruptions to Black Sea trade is already being reflected in food prices. The Food and Agriculture Organization’s benchmark food price index reached a three-and-a-half-year high in July.

Following the attacks on Novorossiysk and Russia’s subsequent strike on Ukraine’s largest Danube port at Izmail, corn and wheat prices at the Chicago Board of Trade rose by 4-5 per cent since Tuesday.

US wheat export prices are currently around $321 per tonne, compared with $235 a year ago. Prices have also risen for wheat from the European Union, Canada, Australia and Argentina.

Black Sea becomes key food trade chokepoint

The impact of the conflict is not primarily a shortage of grain production in Russia or Ukraine, but the growing difficulty of transporting their agricultural exports.

Russia and Ukraine together accounted for 27.4 per cent of global wheat exports in 2025-26, as well as 15.8 per cent of barley, 12.5 per cent of corn and 61.5 per cent of sunflower oil shipments, according to USDA data.

Repeated attacks on ports and vessels have increased the risks for shipowners and crews, driving up insurance costs and reducing the number of vessels calling at affected ports.

Ukraine recorded 57 attacks on vessels and 67 attacks on port facilities in July, compared with 14 attacks on ships during the whole of 2025.

Ukraine’s Agriculture Ministry has already sharply reduced its forecast for farm produce exports in 2026-27, from 64.4 million tonnes to 29.6 million tonnes. Its estimate for wheat exports has been cut from 17.6 million tonnes to 8.3 million tonnes.

Russia has alternative export routes through ports on the Baltic, Caspian and Far East seas, as well as overland rail links. However, more than 80 per cent of its grain exports still pass through the Sea of Azov and Black Sea.

Drought adds pressure on alternative routes

The disruption to maritime trade is being compounded by drought in parts of Europe, which has lowered river water levels and restricted alternative transport routes, including the Danube.

Low water levels can limit the movement of agricultural commodities to ports and reduce the ability of inland waterways to compensate for disruptions in maritime shipping.

The current situation echoes the surge in food prices after Russia’s full-scale invasion of Ukraine in 2022. The FAO food price index reached a peak in March that year, shortly after the war began, and prices remained elevated until grain shipments resumed through safe maritime corridors established under a UN-backed initiative.

The renewed attacks on vessels and ports could add another layer of pressure to global food markets, particularly as the Strait of Hormuz remains a major concern for energy and commodity trade.

Extreme heat in Europe and the possibility of El Niño-related weather disruptions could further complicate the global food supply outlook.

While the Strait of Hormuz has drawn much of the attention this year, the Black Sea, Sea of Azov and Kerch Strait are emerging as equally important chokepoints for global agricultural trade, with any prolonged disruption potentially adding to pressure on food prices.