ECONOMY

Industry frets over Ukraine

Commodity rates spiral higher after invasion, with shipping costs for firms set to follow suit

Industry frets over Ukraine

Greek households are staring at a new wave of price hikes, whose size and duration will mostly depend on the war in Ukraine.

Besides the increased energy rates that are generating a rise in production and shipping costs, the war in Eastern Europe will have a direct effect on the prices of basic raw materials, such as cereals, olive oil etc, on top of the recent jump in rates due to the pandemic, inclement weather and the sudden surge in demand.

Greek food companies, particularly those that use wheat and flour as their main ingredients, are extremely worried by the situation and waiting to see what happens with the new developments in Ukraine. The anticipated rocketing of rates in wheat, corn and soya is going to affect farming too, due to price rises in animal feed.

For example, soft wheat’s rate soared yesterday to 344 euros per ton at the Euronext commodities exchange in Paris from €274/ton just three days earlier. A market rate at €340/ton means the industry must buy a ton at €400 when shipping and other costs are included.

“At such a rate you do not buy, and of course you do not build any stock. We will first seek to sell the products we already have and then go on to buying any raw materials, if that situation persists,” a high-ranking official at a major flour company in Greece told Kathimerini.

In 2020 rates ranged around €210/ton, they recently climbed up to €300/ton, and while they had been declining over the last few weeks the Russian invasion of Ukraine sent them soaring again.

The country’s major bread and biscuits producers are also worried, as they fear shipping costs will also jump higher, as are fruit and vegetable exporters. Greek exports to Ukraine, amounting to €42 million per year, are under major threat, while the even greater amount due for delivery to Russia will depend on the kind of sanctions the European Union will decide to impose on Moscow in response to its aggression toward Ukraine.