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War in Ukraine: The rational “ wait‐and‐see ” mode of global food markets

Author

Listed:
  • Nicolas Legrand

    (SMART - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Rennes Angers - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement)

Abstract

Russia's invasion of Ukraine is a major shock at the heart of the breadbasket of Europe at a time when global stocks are running short. With inelastic supply and demand for such basic goods and lack of inventories to cushion the shock, the basic economics of storage arbitrage explains the commodity price spikes needed to ration the war-related supply shortage. In this paper, I show that sound policymaking in this context could rely on the rational expectations storage model to make sense of the chaotic price fluctuations. Empirical analysis of the unfolding commodity shock using a storage model lens suggests that, 3 months after the Russian invasion, the global food market switched into a "wait-and-see" mode, with price movements reflecting a loss in the size of the global share of caloric production from Ukraine.

Suggested Citation

  • Nicolas Legrand, 2023. "War in Ukraine: The rational “ wait‐and‐see ” mode of global food markets," Post-Print hal-03966878, HAL.
    • Handle: RePEc:hal:journl:hal-03966878
    DOI: 10.1002/aepp.13335
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    Cited by:

    1. Stanislav Yugay & Linde Götz & Miranda Svanidze, 2024. "Impact of the Ruble exchange rate regime and Russia's war in Ukraine on wheat prices in Russia," Agricultural Economics, International Association of Agricultural Economists, vol. 55(2), pages 384-411, March.
    2. Mariusz Hamulczuk & Karolina Pawlak & Joanna Stefańczyk & Jarosław Gołębiewski, 2023. "Agri-Food Supply and Retail Food Prices during the Russia–Ukraine Conflict’s Early Stage: Implications for Food Security," Agriculture, MDPI, vol. 13(11), pages 1-17, November.
    3. Goyal, Raghav & Steinbach, Sandro, 2023. "Agricultural commodity markets in the wake of the black sea grain initiative," Economics Letters, Elsevier, vol. 231(C).
    4. Artiom Volkov & Mangirdas Morkūnas & Maria Crescimanno, 2025. "Is common agricultural policy competent to steer EU agriculture in turbulent times? Evidence from the European dairy sector," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 13(1), pages 1-24, December.

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    Keywords

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    JEL classification:

    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

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