Russia-Ukraine conflict drives up global wheat prices, and in turn food costs in Thailand (Current Issue No.3310)

The ongoing conflict between Russia and Ukraine, which are the world’s leading wheat exporting nations, has driven up global wheat prices to a record high that we have never seen in recent years. Soaring global wheat prices have affected Thailand in terms of higher raw material costs seen in the downstream industries that are heavily dependent on wheat for processing. It is expected prices of imported wheat will stay at elevated levels over the next six months (March-September) because of tight global wheat supplies and maize outputs in Thailand during the current harvest season have yet to enter the market. As a result, the food industry is bound to experience higher processing costs or a shortage of raw materials. This will in turn cause consumers to incur additional food costs, and inflation, which remains at an elevated level, to rise in the future, thus undermining the already fragile household purchasing power. Despite uncertainties surrounding wheat supplies, it is expected that issues related to a shortage of food raw materials will ease during 4Q22 as substantial maize outputs will enter the market, helping ease pressure on food costs for consumers as compared to that seen in the preceding quarters.