Wheat Futures Soar; Food Prices Set To Rise As Well

Russia's attack on Ukraine is causing wheat prices to spike, worsening already high food prices. Wheat futures were up about 5.35% Tuesday, the highest since 2008. The higher prices make wheat more expensive for food makers, who will likely pass those costs on to consumers, Danielle Wiener-Bronner and Vanessa Yurkevich reported for CNN Business.

Photo Insert: With wheat prices already on the rise, the conflict abroad is placing even more pressure on a still ailing supply chain.

Ukraine and Russia together are responsible for about 14% of global wheat production, according to Gro Intelligence, an agricultural data analytics firm. The two countries supply about 29% of all wheat exports.

Prior to the invasion, Ukraine was on track for a record year of wheat exports while Russia's wheat exports were slowing, the US Department of Agriculture said.

"This could not come have come in the worse time," said Robb MacKie, president and CEO of American Bakers Association.

With wheat prices already on the rise, the conflict abroad is placing even more pressure on a still ailing supply chain. Russia is the top exporter of wheat, while Ukraine is in the top 5. The two counties compete in export markets like Egypt, Turkey, and Bangladesh.

"Depending on how this comes out and how long it goes, wheat farmers [in Ukraine] may not be able to plant spring wheat, corn, and other things. So, they might go a year without any crops," MacKie added.

Most US consumer brands don't rely on imported ingredients, said Katie Denis, who leads communications and research for the Consumer Brands Association, a US trade group.

"For the US market, we only import about 8% of the total stuff needed for the [consumer packaged goods] industry," she said.

Most imported items come from Mexico and Canada, she added. Higher wheat prices are good news for US farmers, as more demand could shift to the US. Heneghan said that as global supply tightens, US farmers could export more product.

"A lot of times, you'll see the demand come back to the US ... when you have global events that shut down exportable surpluses," he said. "But it comes at a higher price." That could be good news for US farmers, he added, but not for consumers.

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