We are seeing most exposure is indirect rather than direct – and it is more likely to impact prices than availability.
Oil
Larger players have a level of contractual protection – but if the crude barrel price continues to rise then this will feed into costs later this year. As you’d expect this will have a far-reaching impact on all supplier costs, but also the running costs of other supply categories. For example, diesel counts for c60% of the cost of fishing.
Vegetable Cooking Oil
This may be the product most immediately impacted. Although UK market mostly buys rapeseed oil, the market is influenced by the price of sunflower oil where 60% of the world’s crop comes from Ukraine. Again, larger players will have some contractual protection – but we would anticipate this leading to cost increases over the spring and summer.
Energy
Gas (and therefore electricity) prices are likely to rise following Germany’s blockage of the Nord Stream 2 project. Similar impact on suppliers as we have seen with the price of oil.
Wheat & Grains
Generally, these items are not sourced directly from Ukraine who are a large supplier to African & Asian markets – but the market shortfall from such a material growing area might well push prices up over time. We note that the Ukrainian Black Sea ports are already closed with vessels now queueing. Wheat impacts obvious products like flour, bread and pasta – but tends also to impact agricultural goods where feed is a key component.
Chicken
Poland is one of the largest EU producers of fresh chicken. A large number of workers in these poultry factories are Ukraine Nationals who have returned home to defend their country which has left a shortfall of staff to operate at required levels. Demand in Poland has also increased, with over 1m Ukrainian refugees having now entered to seek safety.
Fish
Russia controls 35% of the cod quota that is mostly processed in China. This is likely to cause higher prices.
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