Financial Times writers Roman Olearchyk, Guy Chazan, Polina Ivanova and Demetri Sevastopulo reported on Tuesday that, “Russia stepped up its bombardment of Ukraine’s biggest cities, firing missiles on targets in populated areas as Vladimir Putin’s forces turned to more brutal military tactics in a bid to regain momentum on the sixth day of the invasion.”
The FT writers explained that, “The Kyiv assault capped another mixed day for Russian forces that easily outgun and outnumber the Ukrainian army but have struggled to make the fast progress expected, particularly in the north of the country.
“The Pentagon said 80 per cent of the Russian forces that had amassed on the border before the invasion had entered Ukraine. But a senior defence official said Ukrainian resistance and logistical problems including insufficient fuel supplies seemed to be slowing the advance on Kyiv.”
Meanwhile, Reuters writer Rod Nickel reported this week that, “Canada’s Nutrien Ltd, the world’s biggest fertilizer producer, said on Tuesday that Russia’s invasion of Ukraine could result in prolonged disruptions to the global supply of potash and nitrogen crop nutrients.
“The United States, European Union and other countries have imposed economic sanctions against Russia, moves that could hinder its exports of natural gas, potash and nitrogen. Belarus, Russia’s ally, is already subject to European and U.S. sanctions that have restricted its potash exports,” the Reuters article said.
Nickel added that, “Nutrien expects to sell up to 14.3 million tonnes of potash this year, its most ever, and has said it is considering further expansion.”
Ana Swanson reported in today’s New York Times that, “Russia accounts for about a fifth of the global trade in natural gas,” and Carol Ryan reported in today’s Wall Street Journal that, “So far, the West has avoided sanctioning Russian energy. If that policy changes, higher prices for natural gas—a major input for agricultural fertilizers—would also make it more costly to produce and purchase food.”
In addition, Bloomberg writer Elizabeth Elkin reported on Tuesday that,
Russia is a major low-cost exporter of many kinds of crop nutrients. ‘No other nation has the same breadth of readily exportable fertilizer supply,’ says Alexis Maxwell, an analyst with Bloomberg’s fertilizer analysis and news publication Green Markets. ‘Their fertilizers move to all continents.’
“If the global trade in fertilizer is further disrupted, it will mean higher costs for farmers across the globe, and in turn more food inflation at a time when global food prices have already been hitting record highs. Prices for the widely used nitrogen fertilizer urea in New Orleans surged 29% from the previous week—a record for the 45-year Green Markets index—after Russia invaded Ukraine.”
“Soaring Fertilizer Prices Are About to Increase the Cost of Food,” by Elizabeth Elkin. Bloomberg News (March 1, 2022).
A New York Times opinion column by Michael J. Puma and Megan Konar noted on Tuesday that, “Fertilizer scarcity jeopardizes global crop production at a time when some or all of the 13 percent of global corn and 12 percent of global wheat exports from Ukraine could be lost.”
More broadly, Financial Times writers Emiko Terazono, Neil Hume and Nic Fildes reported on Tuesday that, “Even before Moscow’s attack on Ukraine, growing geopolitical tensions from Europe had seeped into global food markets. Prices for key fertilisers jumped last year after the EU announced sanctions over human rights abuses against Belarus, a leading potash producer, and China and Russia, also large fertiliser exporters, put in place export curbs to safeguard domestic supply.”
The FT writers added that, “Analysts expect prices for phosphate to remain high until China lifts its export ban in the middle of the year, while tensions surrounding Belarus are unlikely to recede any time soon. ‘It’s difficult to see that [potash] premium going down,’ says Chris Lawson, head of fertilisers at consultancy CRU.”
Reuters writer Victoria Klesty reported on Tuesday that, “Russia’s invasion of Ukraine threatens global food supplies, Norwegian fertiliser maker Yara International said on Tuesday, adding that the international community needed to reduce its dependence on Russian raw materials for agriculture.”
Klesty pointed out that, “But Russia also exports crop nutrients as well as natural gas, which is critical for producing nitrogen-based fertilisers. Yara said that in total, 25% of the European supply of the key crop nutrients nitrogen, potash and phosphate come from Russia.
“‘With the geopolitical conditions out of balance, the biggest sources of raw material to Europe’s food production are being subject to limitations, and there are no short-term alternatives,’ Yara said in a statement.”
Beyond the complication of fertilizer issues, Bloomberg writer Chunzi Xu reported on Tuesday that, “U.S. farmers and truckers are paying the highest price for diesel in nine years after oil soared above $100 a barrel amid intensifying sanctions against Russia.”
“Diesel Surges to 9-Year U.S. High Ahead of Massive Crop Season,” by Chunzi Xu. Bloomberg News (March 1, 2022).
Moving from cost variables to revenue considerations, Bloomberg writers James Poole and Megan Durisin reported on Wednesday that, “The world’s staple grains extended their blistering rally as Russia’s war on Ukraine stifles shipments from some of the biggest suppliers.
“Wheat futures rocketed past $10 a bushel for the first time in more than a decade, and corn leaped to a nine-year high. Soybean oil also hit a record. That’s giving fresh impetus to accelerating global food inflation, while the turmoil unleashed by Russia’s invasion has the potential to dislocate markets for years to come.”
Dow Jones writer Kirk Maltais reported on Tuesday that, “Wheat for May delivery rose 5.4% to $9.84 a bushel on the Chicago Board of Trade Tuesday, the highest since 2008, in reaction to indications of a prolonged conflict as Ukraine defends itself from a Russian attack…corn for May delivery rose 5.1% to $7.25 3/4 a bushel…[and]…soybeans for May delivery rose 3.3% to $16.90 a bushel.”
And Reuters News reported on Tuesday that, “Major EU corn producers, particularly Romania, Bulgaria and France, have been a first option for importers to replace Ukrainian supplies.
“But the EU as a whole is usually a net importer of corn for its livestock sector, with Ukraine one of its main suppliers. The bloc’s agriculture ministers will hold a special meeting on Wednesday to discuss the impact of the war in Ukraine.
“‘Volumes are difficult to assess but I think we are talking about hundreds of thousands of tonnes. Every day Ukraine’s ports are blocked means about 100,000 tonnes of corn is missing from world markets,’ another trader said.”
Source: Farm Policy