Between 2021 and 2023, headline inflation surged to multi-decade highs in both advanced and developing economies, defying earlier forecasts of a temporary spike. One of its key drivers was Russia’s invasion of Ukraine, which triggered a sharp rise in commodity prices, largely not reflected by commodity futures markets (Arce et al. 2023, Chahad et al. 2023, Blanchard and Bernanke 2023). The war brought severe logistical disruptions, hindering Ukraine’s ability to export grains. Alongside territorial losses, this led to a drop in the area planted, reducing global grain availability in a way that persists to this day.
In a recent paper (Bondarenko 2025), I analyse these medium-term shifts using a partial equilibrium competitive storage model that endogenises price trends. The findings confirm not only that prices jumped on impact but that the underlying trend also moved higher. This implies that the invasion shock had both transitory and persistent effects, calling for a more robust policy response from central banks. In an era of geoeconomic fragmentation and climate change, the frequency and severity of such shocks – whether from wars or climate-related disasters – could increase. Policymakers will therefore need to engage in deeper analysis of commodity markets to make better-informed policy choices.
Europe’s breadbasket with global reach
With rich black-soil farmland and large-scale grain agriculture, Ukraine regularly produces roughly three to four times as much grain as it consumes. Thus, despite Ukraine’s share of global production being relatively modest, it ranks among the world’s largest exporters. Between the 2016/17 and 2020/21 marketing years (MYs), around 10% of wheat and 14% of corn exports originated from Ukraine, placing it in the top five wheat and top four corn exporters.
This export focus means dependence overseas. Many developing countries in Africa, the Middle East and Asia rely heavily on Ukraine’s grain, with 92% of Ukraine’s wheat exports going to these countries in 2016–2021. As only a fraction of Ukraine’s harvest stays at home, any production shortfall almost entirely affects exports, translating quickly into higher prices and shortages for vulnerable importers (McGuirk and Burke 2022).
Figure 1 Shares in world production by country in 2016/17 – 2020/21 MY
Source: USDA PSD, own estimates.
Unsurprisingly, when the war almost halted trade with Ukraine (Djankov and Blinov 2022),
wheat prices had surged by 40% by May 2022, surpassing $500 per ton, and corn prices had risen by 25%. However, Ukraine’s 2021/22 MY harvest was mostly saved: by early 2022, Ukraine had already harvested and even shipped the bulk of it. Accordingly, once the remaining grain began to move – initially via the EU’s overland ‘solidarity lanes’ and later through the Black Sea Grain Initiative – wheat prices fell 27% from their May peak by August, while corn prices declined by 15% over the same period.
Nevertheless, the overall price level for the 2022/23 MY remained close to that of 2021/22 MY, despite a gradual decline in prices throughout the year. Not only did uncertainty about the durability of both land and sea export routes persist,
but the overall availability of grains from Ukraine declined. Due to territory losses and active combat, reduced spring planting, and a shift to alternative crops, Ukraine’s wheat and corn trend areas
contracted by approximately 25%, translating into a 0.7–0.8% reduction in global planted area. Meanwhile, according to USDA estimates, trend yields were unaffected by the invasion, with the entire impact absorbed through reduced acreage.
Overall, Ukraine’s trend in wheat and corn areas remained nearly one-fourth below its pre-war trajectory three years after the beginning of the full-scale war. This decline already reflected both the physical toll of war and disruptions to export infrastructure. Yet, if Ukraine’s ports had remained non-operational beyond the first few months of the invasion, the drop in planted areas could have been far more severe (more than 60%). Alternative export routes via EU ‘solidarity lanes’ and Danube ports could carry, at best, just over half of Ukraine’s normal grain exports and about a third in an average month. Were it not for the sequence of successful operations by the defence forces of Ukraine that allowed ports to resume operations, world harvested areas could have declined by about 2%.
Evidence from a commodity storage model
To quantify the impact of these structural shifts, I apply an extended commodity storage model to global wheat and corn markets. Unlike the standard supply–demand framework, the storage model includes a competitive inventory holder who smooths prices over time. I further extend the model by incorporating trends in consumption, acreage, and yields. This setup enables the estimation of endogenous price trends, offering a more grounded and interpretable view of trend movements than traditional statistical filters.
Figure 2 Actual and trend real grain prices
Source: own estimates.
When applied to 1987–2024 data, this framework not only replicates key empirical features of wheat and corn prices but also helps in scenario analysis. Since trend dynamics evolve only with actual production shifts, the model does not show any price‑trend impact until the 2022/23 MY, when Ukraine’s grain area declined by about 25%. In that first post‑invasion MY, the corn price trend edged up less than 0.6% versus a no‑war counterfactual, while wheat saw a somewhat larger initial increase of about 3.3%. However, as Ukraine’s acreage shortfall persisted, these trend divergences widened to approximately 1.4% for corn and nearly 5% for wheat by the 2024/25 MY. The effect is lingering, despite the stabilisation of spot markets.
Even so, these shifts are modest compared with the hypothetical outcome had Black Sea exports remained fully blocked. Since cuts in planted areas would be deeper in such a scenario, the model sees trend prices soaring by as much as 14% for corn and 22% for wheat by the war’s third year. These results illustrate that structural shocks to production in major exporting countries can have a disproportionate effect on global price trends. Ensuring their continued access to global markets, particularly Ukraine’s, is therefore a matter of global food security.
Outlook and policy recommendations
Beyond retrospective analysis, the structural storage model developed in Bondarenko (2025) can generate trend price forecasts, based on trend production and consumption growth. As an illustration, in the paper I use adjusted projections from the OECD-FAO Agricultural Outlook 2024-2033. The results show that the effects of the invasion on trend prices indeed persist throughout the forecast horizon. Although the gap between pre- and post-invasion trends gradually narrows as the relative size of Ukraine’s acreage shortfall to global totals diminished, the upward shift in price trends remains.
For policymakers, this highlights the importance of looking beyond short-term price volatility and accounting for lasting structural changes in agricultural fundamentals, especially in emerging markets, where food comprises a higher share of the CPI basket (Goujard and Beynet 2022, Soldani et al. 2023). While Russia’s invasion of Ukraine was an extraordinary shock, future disruptions may arise from extreme weather events, which are becoming increasingly frequent due to climate change (IPCC 2021). In such circumstances, overreliance on agnostic assumptions, such as futures-implied prices, creates a risk of significant inflation forecast errors.
Although monetary policy cannot meaningfully influence agricultural supply or demand in the short run, recurrent or persistent forecast errors can undermine policy credibility and de-anchor inflation expectations. Policymakers should therefore work on extending their analytical toolkit with models better suited to capture dynamics in commodity markets.
References
Arce, O, G Koester, and C Nickel (2023), “One year since Russia’s invasion of Ukraine – the effects on euro area inflation”, ECB Blog, 24 February.
Blanchard, O and B Bernanke (2023), “What Caused the US Pandemic-Era Inflation?”, NBER Working Paper 31417.
Bondarenko, O (2025), “Shockwaves from Ukraine: Trends and Gaps in Agricultural Commodity Prices”, NBU Working Papers, 2/2025.
Chahad, M, A C Hofmann-Drahonsky, A Page, and M Tirpak (2023), “An updated assessment of short-term inflation projections by Eurosystem and ECB staff”, Economic Bulletin, Box 6, Issue 1, ECB.
Djankov, S and O Blinov (2022), “Restarting Ukraine’s agricultural exports”, VoxEU.org, 10 June.
Goujard, A and P Beynet (2022), “The surge in inflation dispersion in the euro area: Key drivers and policy responses”, VoxEU.org, 12 September.
Intergovernmental Panel on Climate Change (2021), “Summary for Policymakers”, IPCC Sixth Assessment Report, Working Group 1: The Physical Science Basis.
McGuirk, E and M Burke (2022), “War in Ukraine, world food prices, and conflict in Africa”, VoxEU.org, 26 May.
Soldani, E, O Causa, and N Luu (2023), “The cost-of-living squeeze: Distributional implications of rising inflation”, VoxEU.org, 24 April.