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The full effect of sanctions imposed on Russia following its invasion of Ukraine may not yet be factored into global prices leading to potential further rises, according to analysis by international financial services provider Rabobank reported by AgriCensus on 4 March.

Rabobank estimated that Ukraine – which was in the middle of a strong export programme – could still hold export stocks of around 7M tonnes of corn, 6M tonnes of wheat and 3M tonnes of sunflower oil, which it could now struggle to export.

However, while current corn and wheat prices were likely to have taken into consideration the impact of lost export capacity, the extent of sanctions on Russia, or potential damage to planting in the weeks ahead, had currently not been factored into global prices, Rabobank said.

“A further escalation and recent heavy sanctions on Russia, which will disrupt Russian exports of grains, energy and fertilisers, is only to a limited extent priced in and could still drive prices up,” Rabobank’s general manager of research Stefan Vogel said.

The bank added that a direct ban of Russian grains was unlikely, on humanitarian grounds, but said “indirect disruptions are occurring.”

It was too early to forecast the impact on 2022 production, Rabobank said, with wheat, rapeseed and over half of the barley crop sown, and corn and sunflower planting usually starting from April.

“The length of the war and the extent of the disruptions will be crucial to monitor,” the report said.

Ukraine typically exports 25M tonnes of wheat - around 12% of global trade – and 35M tonnes of corn, or 16% of world trade, according to Rabobank.

The country exports 3M tonnes of rapeseed, 7M tonnes of sunflower oil and 18% of barley.

When evaluating the likely impact of sanctions, and despite grains expected to be excluded from direct penalties, Rabobank said that surging costs of inputs and Russia’s suspension from the international payment system known as Swift would also hit the country.

“Swift sanctions recently introduced by the European Union and the USA will cut deeply into the ability of Russia to receive international payments for its exports and could significantly limit the capability to pay for all exported goods, including food, fertiliser and energy,” Rabobank said.

With Russia also exporting 13% of the world’s crude oil and 9% of natural gas, any disruption was also likely to push up prices for key inputs such as urea and diesel, according to the report.