North America Ukraine Update: Global Wheat Supply May Be Disrupted

Ukraine Update: Global Wheat Supply May Be Disrupted


Grain prices were rising before the Ukraine conflict. But recent days have seen unprecedented further gains as two of the world’s biggest producers, Russia and Ukraine, are at war.

Wheat closed in Chicago at the highest price ever on Monday. Benchmark corn and soybean futures have each surged by 26% this year. Those kinds of increases in food-staple commodities have been associated with social unrest throughout history.

“Remember, bread riots are what started the Arab Spring, bread riots are what started the French Revolution,” said Sal Gilbertie, CEO of Teucrium, the largest U.S. exchange-traded fund issuer focused solely on agriculture funds. “It is a biblical event when you run low on wheat stocks. You would not see a global food shortage. Unfortunately, what you are going to see globally is that billions of people might not be able to afford to buy the food.”


Gilbertie does not think the world will run out of wheat — but prices could continue to rise, and that will be most problematic for vulnerable global populations. “Ukraine dominates what they call the sun-seed market,” he said. “Sunflower oil is a major component of cooking oil and food, and you see palm oil rising, and soybean oil rising. That is a big deal, especially for the poorest of the poor, where cooking is a big part of the daily budget.”

Global food prices rose to a record high in February, led by vegetable oil and dairy products, according to the UN’s Food and Agriculture Organization.

Russia Ukraine China India

Let’s bring it back to wheat as an example of the impact of the war in Ukraine and sanctions on Russia. According to the same organization, Russia was the top exporter of wheat by metric tonnes shipped in 2020 and Ukraine the fifth largest. By contrast, China and India top Russia when it comes to production — but consume most of the crops domestically.

Sanctions imposed on Russia by many nations now means wheat already harvested and stored there is not being bought.

Winter Wheat

As for Ukraine, the market has adjusted to the probability that wheat harvested and stored last season would not be shipped, Gilbertie said. What is now in question is what happens to the wheat currently in the ground. It is mostly winter wheat, he said; it is planted in autumn, then sprouts, grows and is harvested in spring.

“What the market’s trying to do is price in the potential of there not being a harvest season for wheat, and not being able to get the wheat out of the fields and/or shipped out of Ukraine,” he said.

Crops like sunflower and corn are planted in spring, so it is unclear whether farmers will be able to plant at all, between the Ukrainian war draft, the invasion itself, and supply shortages of fuel and fertilizer.

Nickel Passes $100,000 as Big Short Tests 145-Year-Old Exchange

A Bloomberg report said:

Nickel soared past an unprecedented $100,000 a ton on the London Metal Exchange amid a huge short squeeze that has embroiled a major state-owned Chinese bank and encouraged rule changes from one of the world’s top commodity exchanges.

The material used in stainless steel and electric-vehicle batteries surged as much as 111% Tuesday after rallying as much as 90% the day before. The market on the London Metal Exchange (LME) is in the grip of a massive squeeze in which holders of substantial short positions are being forced to cover at a time of low liquidity. Nickel rose 106% to $99,000 a ton as of 2:23 p.m. in Shanghai.

Late Monday, the LME decided to allow traders to defer delivery obligations on all its main contracts — including nickel — in an unusual shift for a 145-year-old institution that touts itself as the “market of last resort” for metals. The LME also gave a unit of China Construction Bank Corp. extra time to pay hundreds of millions of dollars in margin calls that were due Monday, according to people familiar with the matter.

Nickel was already rallying on tight supplies even before Russia’s military operation in Ukraine, which has sharpened fears of sweeping commodity shortages. Higher nickel prices, if sustained, threaten to ratchet up costs for electric-vehicle batteries and complicate the energy transition. Russia produces 17% of the world’s top-grade nickel.

“What we do know is that markets tend to over-react a little bit, they sometimes over-shoot,” Gavin Wendt, analyst at consultancy Mine Life Pty in Sydney said. “But in this instance, with the uncertainty of war, it is hard to talk about a commodity being over-valued.”

The missed payments from CCBI Global Markets — the unit of China Construction Bank – are not necessarily an indicator of any problems at the parent company, which is one of China’s largest banks. It is more likely due to a failure by one of the subsidiary’s metals-industry clients failing to make margin payments, according to one of the people familiar with the matter.

Already-soaring Lumber Prices Aggravated

Lumber prices are continuing to surge amid the Ukraine crisis, and traders could soon see even bigger price swings.

Futures have been on a wild ride since the onset of the COVID-19 pandemic, and they soared to a record high of $1,711 per thousand board feet last May. After tumbling through the spring and summer, they have been rebounding and got a fresh jolt from Russia’s military operation in Ukraine. Since Russian President Vladimir Putin ordered troops into Ukraine, prices have jumped 14% to $1,452, putting them just 15% below the all-time peak.

The war in Ukraine has “just aggravated the bull market we have in commodities,” said David Russell, VP of market intelligence at online broker-dealer TradeStation. “With the bull market in commodities like oil and a lot of metals that we’ve been seeing, that only gives extra support to something like lumber.”

Victoria Spartz, a Ukraine-born Republican lawmaker from Indiana, told Fox Business that the West should target Russia’s markets for lumber and energy to stop its attacks.

Such sanctions could rattle lumber prices further. Russia is the largest lumber exporter in the world, and its forest-product exports were worth more than $12 billion last year, said trade journal Canadian Forest Industries, which cited data from Wood Resource Quarterly.

Even before the war began, lumber prices were volatile. In January, they fell 15%. Since February 1, they have soared 55%. Just prior to Russia launching attacks on Ukraine February 24, a report from the Wall Street Journal noted prices of leading lumber futures were so wild that they ended at daily limits in 25 of 35 trading sessions this year.

Exchange operator CME Group is widening lumber’s daily trading limits by 90% beginning March 7. That means the maximum daily up or down move will be $57 per thousand board feet, and $86 per thousand board feet the following day if prices close at the aforementioned limit, the operator said.

Plans To Supply Fighter Jets To Ukraine Could Be Doomed

An Axios report said:

Efforts to push the Biden administration into supporting the transfer of Russian-made fighter jets to Ukraine appear doomed for both technical and geopolitical reasons.

Ukrainian President Zelensky pleaded for the jets on Saturday during a Zoom call with more than 300 members of Congress, saying they were badly needed if NATO would not establish a “no-fly” zone.

Those jets would likely be Soviet-era MiG-29s possessed by Poland, which Ukrainian pilots are capable of operating.

The U.S. would, in turn, backfill Poland’s fleet with American-made F-16s.

White House press secretary Jen Psaki reiterated Monday the U.S. would be in “no way opposed” to Poland’s “sovereign decision” to transfer its planes but stressed there are a number of logistical hurdles.

Those include how the planes would actually enter Ukraine’s heavily contested airspace, as well as how to accelerate the years-long U.S. procurement process for “serious weapon systems” like the F-16.

The Russians have also been bombing Ukraine’s airports, raising the specter of the planes having to be based in Poland or other NATO territory — increasing the risk of a Russian attack on soil that would have to be defended by the alliance.

Zelensky’s appeal produced an immediate and bipartisan groundswell of support.

Senate Foreign Relations Chairman Bob Menendez (D-N.J.) sent a letter on Monday calling on the Biden administration to “do everything we can to compensate countries that heed Ukraine’s desperate call for fighter jets to defend their homeland.”

His Republican counterpart, Sen. Jim Risch (R-Idaho), tweeted: “There is absolutely no reason we can’t supply airplanes to Zelensky and the Ukrainians. Our allies are willing and able to provide them, the admin needs to get out of the way.”

Top Russian military expert Michael Kofman says it is a mistake to “waste time” on the MiG debate, arguing there are other supplies and weapons systems that would be more helpful to Ukraine.

“Frankly, a lot of the aircraft Ukraine has put up has gotten shot down,” Kofman said.

“And pushing MiG-29s — are they really going to fly from air bases that are being readily barraged on a daily and nightly basis?”

There is also the matter of whether Poland itself is willing to risk provoking Russia, though the calculus in Warsaw could change if it received rock-solid security guarantees from the U.S.

Calling a Wall Street Journal report about the potential MiG-F16 deal “FAKE NEWS” on Sunday, the office of the Polish prime minister tweeted: “Poland would not send its fighter jets to Ukraine as well as allow to use its airports. We significantly help in many other areas.”

A government spokesman clarified to a public broadcaster on Monday: “It is a very delicate matter. The Polish authorities have not made any decisions on the transfer of the planes to Ukraine.”

The risk of being deemed a “co-combatant” by Russia continues to permeate every U.S. and NATO decision about weapons transfers and intelligence sharing.

Russia’s defense ministry warned Sunday that if foreign-supplied jets are used to attack the Russian military, it could be considered “the involvement of these states in an armed conflict.”

Another report said:

Poland has not yet given Ukraine its MiG-29 fighter jets to combat Russia despite U.S. ‘green light’

Ukraine has been asking NATO members Poland, Bulgaria, and Slovakia to donate their Soviet-era MiG-29 and Su fighter aircraft to Ukraine’s air force since right after Russia invaded the country Feb. 24. All three countries seem cool to the idea.

Ukrainian President Volodymyr Zelensky told ABC News on Monday that he asked President Biden over the weekend for help protecting Ukrainian skies from Russian rockets, and if a no-fly zone is out, he is sure Biden can get NATO allies to donate their old Soviet jets. Biden’s National Security Council staff spent much of the day Saturday trying to figure out a way to facilitate Poland’s transfer of MiG-29s, The New York Times reports.

Secretary of State Antony Blinken said in Moldova on Sunday that Poland has the “green light” to give its MiG-29s to Ukraine in return for new U.S. F-16s, which Poland’s air force is transitioning to as it modernizes. “We are looking actively now at the question of airplanes that Poland can provide to Ukraine and looking at how we might be able to backfill should Poland decide to supply those planes,” he said.

“As far as sending planes, I can only repeat that no decisions have been taken on the subject,” Polish government spokesman Piotr Mueller said Sunday.

One of the primary concerns for Poland, Bulgaria, and Slovakia is that they do not draw retaliation from the Kremlin or draw NATO into a direct military conflict with Russia. So the MiGs could not be stored on NATO soil, and “it is not clear if Ukraine would be able to safely house and service them in the long run, given the warfare on its territory,” The Associated Press reports. “Another question to resolve would be how to deliver the planes to Ukraine,” because Polish pilots cannot fly them into the country and having Ukrainian pilots come pick them up would pose similar risks.

“There is also an F-16 production backlog, which means the countries that potentially give away their MiGs and Su fighters to Ukraine would need to wait for the backfill for some time,” AP reports. To make things even “more complicated,” the Times adds, “many of those fighters are promised to Taiwan — where the United States has greater strategic interests.”

“I cannot speak to a timeline, but I can just tell you we’re looking at it very, very actively,” Blinken said Sunday.

Russia May Cut Gas Supplies If Oil Ban Goes Ahead

Russia has said it may close its main gas pipeline to Germany if the West goes ahead with a ban on Russian oil.

Deputy Prime Minister Alexander Novak said a “rejection of Russian oil would lead to catastrophic consequences for the global market”, causing prices to more than double to $300 a barrel.

The US has been exploring a potential ban with allies as a way of punishing Russia for its invasion of Ukraine.

But Germany and the Netherlands rejected the plan on Monday.

The EU gets about 40% of its gas and 30% of its oil from Russia, and has no easy substitutes if supplies are disrupted.

In an address on Russian state television, Novak said it would be “impossible to quickly find a replacement for Russian oil on the European market”.

“It will take years, and it will still be much more expensive for European consumers. Ultimately, they will be hurt the worst by this outcome,” he said.

Pointing to Germany’s decision last month to freeze certification of Nord Stream 2, a new gas pipeline connecting the two countries, he added that an oil embargo could prompt retaliation.

“We have every right to take a matching decision and impose an embargo on gas pumping through the [existing] Nord Stream 1 gas pipeline,” he said.

Russia is the world’s top producer of natural gas and second top producer of crude oil, and any move to sanction its energy industry would badly damage its own economy.

Ukraine has implored the West to adopt such a ban, but there are concerns it would send prices soaring. Investor fears of an embargo drove Brent crude oil to $139 (£106) a barrel at one point on Monday – its highest level for almost 14 years.

Average UK petrol prices also hit fresh record of 155p a liter.

Brent crude – the global oil benchmark – rose by 3.7% to more than $127 a barrel in Asia trade on Tuesday.

Quoting unnamed sources, Reuters news agency reported that the U.S. might be willing to move ahead with an embargo without its allies, although it only gets about 3% of its oil from Russia.

However, on Monday, German Chancellor Olaf Scholz dismissed the idea of a wider ban, saying Europe had “deliberately exempted” Russian energy from sanctions because its supply could not be secured “any other way” at the moment.

European powers have, however, committed to move away from Russian hydrocarbons over time, while some Western companies have boycotted Russian shipments or pledged to divest their stakes in Russian energy companies.

Novak said that Russian companies were already feeling the pressure of U.S. and European moves to lower the dependence on Russian energy, despite fulfilling all its contractual obligations to deliver oil and gas to Europe.

“We are concerned by the discussion and statements we are seeing regarding a possible embargo on Russian oil and petrochemicals, on phasing them out,” he said.

“We see our partners, traders, shipping companies, banks and financial institutions coming under enormous pressure.”

More than 1.7 million Ukrainians have fled to Central Europe since the conflict began on 24 February, the UN refugee agency said on Monday, with over 1 million arriving in neighboring Poland.

Kremlin spokesman Dmitry Peskov told Reuters that Moscow would halt operations if Ukraine ceased fighting, amended its constitution to declare neutrality, and recognized Russia’s annexation of Crimea and the independence of regions held by Russian-backed separatists.

A Ukrainian negotiator said that although small progress on agreeing logistics for the evacuation of civilians had been made, things remained largely unchanged.

‘Life is more important’: Africans in Ukraine lead their own rescue efforts

A media report said about African students stranded in the conflict region:

Tolulope Osho, 31, reached the Polish border the day after Russia invaded Ukraine. He was close to safety from the war-torn land. But he decided to turn around.

“I have friends,” he said of his fellow Africans in Ukraine. “If by leaving my valuables, I can save more lives, then I’m doing it. Life is more important.”

Osho, who’s from Nigeria, returned to Ternopil, in western Ukraine, where he’s remained in a safe zone for the past week. He’s helped shelter people in underground bunkers, driven them to borders and provided money through a fundraiser. In all, he said he and a friend have aided some 200 people.

He said he’s relied heavily on Instagram, where people across the country have reached out to ask for money and transportation.

“I navigate people who don’t know how to get out of the war zone,” he told NBC News, adding that he has helped people reach the Ternopil safe zone, “then to the border. I even buy them train tickets and pay for transportation.”

Organizations like the Lviv Center for Urban HistoryFight for RightBOCTOK-SOS and the Urgent Action Fund for Women’s Human Rights are providing everything from food and transportation to shelter for those fleeing the conflict. And Osho is one of several Africans helping in these rescue efforts, often sharing information online using the hashtags #AfricanInUkraine and #BlackInUkraine. Along with Osho, a trio of women, Korrine Sky, Tokunbo Koiko and Patricia Daley, are among those who have stepped up to help Africans stranded in the country or desperately trying to flee. The women formed Black Women for Black Lives, and provide Africans and Caribbeans in the area with information on the safest routes through areas where they might face discrimination while trying to flee.

Ukraine has become a popular choice for African students, who now account for nearly a quarter of the more than 76,000 foreign students in Ukraine, according to the BBC, which cited government data for its report. While the official count of African and Black people in Ukraine has not been updated in 20 years, Reuters reported that there were more than 16,000 African students in the country, citing figures from the education ministry.

Ukraine is also home to about 20,000 Indian students, who have also reported discrimination and hostility in trying to escape since the invasion, according to the BBC, which referred to government data.

African citizens living in Ukraine have reported incidents of racist discrimination and abuse at the border, which can include beatings, being denied entry to trains or being left stranded in border towns.

“There was a gap in the access Black people and brown people were getting. There was no one offering their homes to Black people, no one offering to pick up the Black individuals,” Daley told NBC News. “There was a tremendous amount of people offering help and support, but I feel like it was limited to Ukrainian nationals alone. And we know what that means. It’s excluding a group of people. There was a need to support Black people because they weren’t getting the support or access. There was a gap and we bridged it.”

Representatives from several African governments — NigeriaGhana, Kenya and Gabon — have condemned the reports, and the African Union said earlier this week that it was disturbed by the news. Filippo Grandi, the U.N. high commissioner for refugees, acknowledged at a Tuesday news conference the discrimination some non-Ukrainians had faced at the border. He said that unfair treatment wasn’t the result of state policies.

Sky, Koiko and Daley have never met in person, but the network of aid they have set up for Black people in need in Ukraine could reach thousands. The women started the Black in Ukraine group chat on Telegram, a messaging app, which has made it possible for more than 4,500 Black people in the country to communicate and coordinate with one another for such necessities as shelter and transportation. After raising at least $40,000 in a pair of PayPal fundraisers, the group launched a GoFundMe campaign, encouraging people around the world to donate to help Black people still in Ukraine as well as those who have escaped.

Black Women for Black Lives began with Sky, 26, who was a second- year medical student in Dnieper. She, her husband and two others frantically grabbed whatever they could and left to find safety when Russia began its attack on the country. Sky, who is from Zimbabwe, described her harrowing journey from Dnieper to her home in England. Sky said that what should have been a nine-hour journey to Lviv to board a train to a border town on the outskirts of Ukraine ended up taking 24 hours because of traffic and Ukrainian officials stopping the group nearly 10 times to check their documents.

The four were initially headed to the Polish border but had heard from peers that Black people at the border village of Medyka had faced severe racism. So Sky and the group decided to seek refuge in Romania, but treatment there was no better. Sky said just before they could cross the border into Romania, she and her fellow Africans were told to leave the line. They were then told to go to a separate line, where she said they stood for at least nine hours.

“It clicked at that point that it was segregation. I realized there was a nonwhite queue and a white queue,” Sky said. “The language is, ‘It is because you are not Ukrainian.’ But that basically means, ‘It is because you are not white.’ ”

Sky documented her journey on her Twitter feed while sharing information and resources for other Black people in the area. Sky and Daley said taxi drivers would hike prices for those fleeing, charging hundreds for transportation to border towns. During her own journey, Sky launched the group chat and encouraged Black travelers to stay in groups or use the group chat to find a companion in various areas.

Once in Lviv, she increased her efforts and, seeing her tweets, Daley and Koiki decided to join Sky’s efforts. Daley said she was thankful for Sky, who focused on helping Black students even when she was not safe herself. It is this community and group effort that has been key for Black students either fleeing or still in Ukraine.

The three said they have assisted more than 500 people, helping them to locate shelter and accommodations in Ukraine, cross the border safely and find refuge once out of the country.

“We created a document (that) the students were able to refer to, to find where the borders were, which borders were safe,” and at which borders Black people had experienced racism, Daley said. “It became a guide that included a list of accommodations, a list of drivers, contacts for when students were crossing over. We found very quickly that once the students had gotten to the border and crossed over, there was no one there to support them. This guide gave them assistance with that.”

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