The effects of the war between Russia and Ukraine are starting to hit consumers’ pockets more strongly. The reduction in the supply of their essential products on the market and the increase in costs that the two countries caused in world agriculture caused prices to change levels. In Brazil, it occurred both in the field and in retail.
This pressure on international and national prices has no end date. The continuation of the war does not allow the two countries to return to the foreign market and makes it difficult to reduce production costs worldwide. Ukraine is a major supplier of grain, and Russia of grain and fertilizer.
The conflict, which completed 40 days this Monday (4), no longer generates as strong pressure as it did at the beginning. Prices, however, remain volatile and at levels well above the pre-war levels.
In the Brazilian case, there is a lower supply of some products due to the reduction in production by farmers, in view of the high costs, which had already been occurring since last year. This is the case with milk.
Retail data from Fipe (Fundação Instituto de Pesquisas Econômicas), released this Monday, compared with those from Cepea (Center for Advanced Studies in Applied Economics), which reflect the field, show that the pressure is increasing.
Wheat was the product that had the greatest impact on prices in recent weeks in the foreign market, with reflections on the domestic market, which already had high values.
The bread roll and wheat flour followed the steps of the cereal. In March, the first had the highest high of the year, rising 3.1% in bakeries, while these began to pay 2.52% more for flour.
Wheat prices are beginning to settle in the foreign market, after accelerating in February, but at higher levels than in the period prior to the Russian invasion of Ukraine.
More price adjustments will come for flour and bread, as mills will begin to purchase wheat with higher average values ​​per ton.
Russia and Ukraine have little importance in the production of soy, but the Ukrainians are the biggest exporters of sunflower oil and are struggling to get this product on the foreign market. The result was a 6% increase in soybean oil prices for Brazilian consumers in March alone. Sunflower oil became 3% more expensive in supermarkets.
The corn, after the skyrocketing prices in the last two years, keeps the bag close to R$ 90 in the region of Campinas, according to Cepea. It is a value that results in heavy costs for feed and protein producers, spilling over to consumers.
Cornmeal rose 6% in supermarkets in March, accumulating 39% in 12 months. Ukraine is the fourth largest corn exporter and Brazil’s competitor in the foreign market.
Rice and beans, which had a downward trend in prices, rose again in March. The cereal, due to the increase in internal and external demand. The legume had an unfavorable climate during the evolution of crops in the first harvest.
The price of milk soared. The long-life type rose 7.8% in retail last month, according to Fipe. Lower demand in 2021 and high costs made most producers reduce investments in the sector, according to Cepea.
Another factor in the increase in prices was external negotiations. Brazilian dairy exports increased by 116% in the first two months, compared to the same period last year.
Cepea reserves for coffee the biggest increase in the field in the last 12 months. The evolution was 76%, a percentage that Fipe also confirms for retail. Smaller international stock and concerns about the Brazilian harvest support the drink.
The price of sugar begins to be stable for the consumer, but at a high level. The kilo of the product had an appreciation of 46% in the last 12 months in retail.
The meats lost the pressure they registered eight months ago, but they still have high values. The bovine, which had the average value of the arroba in R$ 345 in the field in March, accumulates high of 11% in 12 months. In retail, the increase was 1.3% last month, reaching 13% in 12 months.
Chicken prices held steady at the supermarket, and pork fell 1% in March. The drop in pork, on the farm and in retail, is the result of a decline in exports.
Brazilian exports have grown with demand from China in the last three years, but the Chinese have returned to producing more and importing less this year.
The war in Eastern Europe also affected hydrous ethanol prices. With continuous drops this year at the pumps, the hydrated had the first monthly high in 2022, rising 1.13%, according to Fipe.
The rise in oil, due to Russia’s importance in the sector, made gasoline more expensive, allowing for a readjustment of ethanol at the pumps. This increase comes exactly when the sector starts the 2022/23 harvest.
Production costs also raise prices for eggs and “in natura” products. In January, the consumer paid 1% less for eggs than in December. Last month, the increase was 12% over February.
Vegetables, on the other hand, affected by the weather and by increases in inputs, mainly fertilizers, maintain highs well above inflation.
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