Russia's invasion of Ukraine puts wheat supplies at risk

A key ingredient in bread, cereal and baked goods is facing the prospect of supply disruptions as Russia barrels down on Ukraine.

Why it matters: Russia and Ukraine were two of the top five largest exporters of wheat before the pandemic, leading experts to fear that a war could disrupt supplies at a time when the market for the agricultural commodity is already stressed.

• "A prolonged conflict would create bread shortages [and increase consumer prices] this fall," Alan Holland, CEO of sourcing technology company Keelvar, told CNBC.

The big picture: Global wheat supplies plunged to a five-year low in 2021, while prices hit an all-time high, according to the U.S. Department of Agriculture.

• Poor growing conditions in the Northern Hemisphere have strained wheat markets in recent years.

Threat level: General Mills — the maker of Wheaties cereal — warned Tuesday that it has been facing "acute supply shortages on its refrigerated dough, pizza and hot snacks," though it did not specify whether wheat was a primary reason.

• Kellogg CFO Amit Banati told investors earlier this month that wheat inflation is putting pressure on the cereal maker.

Keep in mind: Americans are already grappling with a 40-year high in inflation.

• In January, the price of flour and prepared flour mixes was up 10.3% year-over-year, while the price of bakery products like doughnuts, crackers and pies was up 9.9%.

Yes, but: Ukrainian wheat exports have held steady in recent weeks even as fears mount that "ongoing tensions with Russia is likely to put pressure" on exports, according to S&P Global Platts.

• A State Department spokesperson told Axios it is "committed to working with partners on any potential implications for agricultural markets."

What we’re watching: Whether economic sanctions will affect food exports from Russia or Ukraine and whether war or other action by Russian President Vladimir Putin will disrupt wheat supplies.

Go deeper: Ukraine-Russia crisis latest developments