An invasion of Ukraine, a key supplier of food to Europe, could disrupt global supply chains.

• Wheat export market share of 29% is accounted for by Russia and Ukraine combined.
• In 2021, China became Ukraine's top corn recipient, surpassing the US as its top supplier, according to Dawn Tiura, president at Sourcing Industry Group.
• Analysts stated that besides being major providers of metals and commodities, Russia and Ukraine also play significant roles in the global supply chain.
• Germany would be particularly affected by the escalating crisis within the European Union.

The Russia-Ukraine crisis is expected to cause oil and gas prices to rise even more, resulting in consequences beyond just the energy sector.

The crisis is worsening, causing supply chains to be disrupted from wheat to barley and copper to nickel, according to analysts on CNBC.

An invasion of Ukraine would significantly impact the food supply chain in Europe, according to Alan Holland, CEO and founder of sourcing technology company Keelvar.

Analysts stated that besides being major providers of metals and commodities, Russia and Ukraine also play significant roles in the global supply chain.

In recent days, tensions between Russia and Ukraine have escalated as President Putin ordered Russian forces into two separatist regions in eastern Ukraine following his announcement that Russia would formally recognize the independence of Donetsk and Luhansk.

On Tuesday, U.S. President Joe Biden characterized Russia's actions as the start of an "invasion" of Ukraine.

If a military conflict occurs or crippling sanctions are imposed, there is a risk that certain things will be affected.

Food security

Europe heavily depends on Ukraine for its wheat, barley, and rye production, in addition to being a significant corn producer, analysts stated.

A prolonged conflict could lead to bread shortages and higher prices this fall, even though harvesting season is not yet upon us, according to Holland.

Many countries in the Middle East and Africa, in addition to the European Union, depend on Ukrainian wheat and corn for their food security. Disruptions to this supply could have a significant impact on these regions, according to Dawn Tiura, president at Sourcing Industry Group.

In 2021, China became Ukraine's top corn recipient, surpassing the U.S. as its primary supplier.

The prices of wheat and corn have significantly increased. In Chicago, wheat futures have increased by approximately 12% since the beginning of the year, while corn futures have experienced a 14.5% increase in the same time frame.

If an armed conflict occurs, food inflation may worsen.

If Russian loyalists seize core agricultural areas in Ukraine, rising food prices will be further intensified by additional price shocks, according to Per Hong, senior partner at consulting firm Kearney.

Russia is the world's top wheat exporter, along with Ukraine, who together account for about 29% of the global wheat export market.

Any disruptions to the natural gas supply will affect the production of energy-intensive products such as fertilizers, which will further impact agriculture, said Holland. Last year, fertilizers were already in short supply, leading to soaring prices.

Last year, the European Union's largest supplier of natural gas and oil was Russia.

Metals and raw materials

Over the years, Ukraine has consistently grown its exports and is now a major supplier of raw materials, chemical products, and machinery, including transportation equipment, as stated by Tiura.

Minerals and other commodities are also supplied in large quantities by it, according to analysts.

Since Russian troops started gathering at the border, Ukraine's currency has been declining in value, which will increase the cost of their exports, according to Tiura.

According to Hong, Russia holds approximately 10% of global copper reserves and is a significant producer of nickel and platinum.

Electric vehicle batteries require nickel as a crucial raw material, while copper, often viewed as an economic indicator, is extensively utilized in electronics production and home construction.

The semiconductor industry in the U.S. heavily depends on neon sourced from Ukraine, while Russia also exports critical elements for the manufacturing of semiconductors, jet engines, automobiles, and medicine, according to Hong.

Impact on Germany

Germany would be disproportionately affected by the escalating crisis in most of the European Union.

According to Atul Vashistha, chairman and CEO of Supply Wisdom, Germany relies heavily on natural gas from Russia for its energy needs in manufacturing and electricity.

The potential war or sanctions could lead to a halt in manufacturing production in Germany, as factories would need to reduce their output, which would have a ripple effect on manufacturing in other countries, according to the source.

Autos and auto parts, transport equipment, electronics, metals, and plastics are among Germany's top exports.