00:00A conflict in the Middle East has focused global attention on the Strait of Hormuz,
00:03but the impasse in the Black Sea between Russia and Ukraine is compounding economic damage,
00:08threatening to drive inflation higher and undermine global food security.
00:13Our European agriculture reporter Piotr Kozlov joins us now for more.
00:17Piotr, good to have you with us.
00:18Black Sea shipping has been affected in many ways by the war in Ukraine,
00:22but how significant is the disruption now to shipping through this lane?
00:29Starting from July, the attacks intensified both countries, Russia and Ukraine,
00:33taking each other's ports, also grain vessels and other infrastructure like Silas.
00:39The war started in 2022 after Russia's full-scale invasion of Ukraine,
00:45and the attacks were happening to the time.
00:46But the last two months were crucial and really critical.
00:50So there are almost no ships coming out of the ports.
00:52From this region, actually, both countries are the world's breadbasket.
00:57So at the peak of the season, when they have just harvested their wheat,
01:02the world is waiting for the wheat, let's say, in Vietnam, in the Middle East, in Africa,
01:08and there are no ships.
01:09So it's the critical situation at the moment.
01:13So the effects are very far-reaching of this.
01:16What's the broader economic impact?
01:19The impact is really crucial, given that this already has sent the wheat futures prices
01:27to the three-year high just in the end of August.
01:30And many experts and analysts say that it's not actually the end,
01:35and it probably will drive further the prices.
01:39Given that this all happens in the middle of the crisis in the Strait of Hormuz,
01:46which started in March, pushing the prices of diesel and fertilizers,
01:50which already have affected any crops, any food production in the world,
01:55starting from the spring.
01:57And also the multiplying effect gives the El Nino happening in the Southern Hemisphere.
02:04So altogether, this can really affect and really intensively affect the world food prices.
02:11And I think we're going to be seeing this now.
02:15What are the prospects for how much higher food prices could be driven by this as well?
02:20Because, of course, as you mentioned, there are lots of other factors
02:22that have been putting pressure higher on some of those key staples in recent months.
02:29Well, it's hard to say, like, literally.
02:32But the thing is that as compared to, for example, 2022,
02:35when the futures for wheat in Chicago actually skyrocketed,
02:40reaching around, if I'm not mistaken, 13-plus US dollars per bushel.
02:45And at that time, analysts, traders, everyone was actually afraid of the situation
02:53that no ships with grains are going to be leaving the Black Sea.
02:57And what you can see now, the ships are...
03:00At that time, it didn't happen.
03:01So actually, Russia and Ukraine continued to ship their grains,
03:04like wheat, corn, sunflower, and other agricultural production
03:09out of the ports of the countries.
03:11But today, the situation is that, exactly what everyone was afraid, actually, at that time.
03:16So no ships are coming out.
03:18So as you can imagine, and actually the analysts and the bond investors say
03:22that this crisis is not yet priced in the food bonds.
03:29So I think if there is no solution, if there is no diplomatic agreement in the next month,
03:35I think the situation can be really very sensible for the food prices all over the world.
03:40And especially targeting the countries like the Middle East, Africa, and Asia.
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