On another front, inflation in Argentina is running at a 50% rate.
By Richard Brock, Brock Report As if the feed industry didn’t have enough to worry about going into this year, the war in Ukraine has everyone on edge. One would think such an invasion in today’s time is the most insane thing most of us could imagine, but evidently Putin’s ego and wanting control of what used to be Russia is more important than human lives. The economic sanctions placed on Russia by the U.S. and most of the rest of the world are hurting everyone. One obvious impact is on the trade flow of essential commodities. Russia is one of the world’s largest suppliers of crude oil, natural gas, and fertilizer, plus key industrial metals including palladium and nickel. Last year, Ukraine furnished 13% of the world’s corn exports and Ukraine and Russia combined accounted for 28% of the world’s wheat exports. Russia and Ukraine also accounted for a combined 76% of the world’s sunflower seed oil exports, or 14% of world vegetable oil exports. Their combined 79% world export share of sunflower seed meal was 6.5% of the world’s major protein meal exports last year. What’s interesting is that technically, soybeans and wheat have already made a technical top. Corn futures have not yet confirmed a technical top. As this was written March 21, it would appear as though an event is about to happen to end the war and if that happens, grain prices could tumble quickly. Obviously, if the war doesn’t end, corn and wheat prices are going to stay strong until it does.
Then everyone must continue facing the facts of the real world with runaway inflation, interest rates starting to ratchet higher, and a continued shortage of labor. If the war finishes soon, then Ukraine may be able to get most of its corn crop planted. Another item of interest that we are paying attention to are reports from seed companies that the demand for seed corn continues to be very strong, particularly for the most popular varieties. Don’t expect the huge drop in corn acres as some are predicting. The government could be right on target forecasting a decline of only 1.4 million acres. On another front, inflation in Argentina is running at a 50% rate. They increased the export tariff on soybean oil and meal by another two percentage points this week, pushing it to 33%. As a result, we may see an incremental shift of soybean oil and meal exports to Brazil, and to a lesser extent, to the U.S.
