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Trade Flows Upended, as Shipments from Ukrainian Ports “All But Ceased”

Yaroslav Trofimov reported on the front page of Monday’s Wall Street Journal that, “Russian and Ukrainian officials prepared to meet for the first talks since Moscow began its invasion four days ago, as Ukraine’s defenders held on to the capital, Kyiv, and pushed back Russian troops in urban combat in its second-largest city, Kharkiv.

“In a sign of growing tensions with the West over Ukraine, Russian President Vladimir Putin ordered the country’s nuclear-deterrence forces to be put on alert.

Western allies, meanwhile, escalated efforts to counter Russia.”

Also in Monday’s Journal, Patricia Kowsmann and Ian Talley reported that, “The West is rolling out increasingly tough sanctions on Russia but it is going out of its way to preserve the country’s biggest source of revenue: energy exports.

“In the latest example, the European Union said late Saturday that it had agreed with the U.S., the U.K. and Canada to eject some of Russia’s banks from the global financial system’s payments infrastructure, Swift. The move, if applied to all banks, would be powerful, essentially blocking money transfers in and out of the country. By cutting only some, Western countries are allowing payments, including for energy, to continue through non-sanctioned banks.”

With respect to agriculture, Kowsmann and Talley explained that

The U.S. Treasury also issued exemptions for agricultural exports such as grain, another significant Russian export, and medical and other humanitarian supplies.

Cutting off countries dependent on Russia’s grain exports would risk political instability in those nations, said [Justine Walker, head of sanctions and risk at the Associate of Certified Anti-Money Laundering Specialists], whose group is composed of compliance officers at banks and companies around the world.”

“War in World’s Breadbasket Leaves Big Buyers Hunting for Grain,” by Aine Quinn and Megan Durisin. Bloomberg News (February 26, 2022).

Nonetheless, Bloomberg writer Jasmine Ng reported on Sunday that, “Wheat and corn soared after Western nations imposed tougher sanctions on Russia for the invasion of Ukraine, upending global commodities markets and threatening further increases in food inflation.”

And on Monday, Reuters writer Naveen Thukral reported that, “Global commodity prices charged higher on Monday with strong gains in oil, grains, edible oils and metals after Russia put its nuclear deterrent on high alert and Western nations imposed tough new sanctions on Moscow following its invasion of Ukraine.”

Regarding export flows, Alistair MacDonald and William Boston reported in Monday’s Journal that, “Russia’s invasion of Ukraine is piling new troubles onto the world’s already battered supply chains.”

“The conflict is also bottling up Ukraine and Russia’s vast commodity exports, sending the price of oil, natural gas, wheat and sunflower oil rocketing. Shipping from Ukrainian ports, an important corridor for grain, metal and Russian oil shipments to the rest of the world, has all but ceased.”

MacDonald and Boston added that, “Russia and Ukraine combined account for almost a third of the world’s wheat exports, 19% of its corn exports and 80% of the world’s sunflower oil, according to Commerzbank AG, and much of that flows through Black Sea ports that are currently closed. Soaring grain prices adds to concerns for the mainly developing world countries, like Egypt and Indonesia, that rely on the shipments and where food prices were already rising.”

Bloomberg writers Salma El Wardany, Aine Quinn, and Abdel Latif Wahba reported on Sunday that, “And new deals are not being made. Traders say they are staying away from Russian grain, while exporters can’t agree to contracts at the moment because they don’t know if they will be able to fulfill them as the situation evolves, people familiar with the matter said.”

Meanwhile, Bloomberg writer Pratik Parija reported on Monday that, “India is set to benefit from the shifts in global wheat trade as Russia’s invasion of Ukraine leaves a vital source of supply hanging in balance.

‘The uncertainty caused by the war means that importing nations will be looking to buy wheat from elsewhere. India’s exports could exceed a record 7 million tons in 2021-22 if the conflict drags on, according to Vijay Iyengar, chairman and managing director of Singapore-based Agrocorp International Pte.”

Dow Jones News writer Will Horner reported on Monday that, “Egypt’s state grain buyer was awaiting bids in an international wheat tender Monday, while conflict between Ukraine and Russia raged and heightened concerns about disruptions to grain trading.

“Egypt’s import agency, the General Authority for Supply Commodities, is seeking offers of wheat for delivery between April 13-26. GASC canceled a previous tender Thursday after the outbreak of fighting meant it received one bid.”

With respect to China, William Mauldin reported in Monday’s Wall Street Journal that, “The U.S. wants to pry China away from its tight partnership with Russia. One step, U.S. officials said, is making Beijing feel pain over Russia’s invasion of Ukraine.

“Washington is looking to gain from any divisions between Moscow and Beijing,  the officials said, and Russia’s full-scale assault on Ukraine is an opportunity to force China to choose between siding with Russia and maintaining valuable economic ties to Europe, the U.S. and other parts of the world.”

Mauldin noted that, “China’s balancing act has proved difficult on the ground in Ukraine, despite the countries’ robust trade and investment relations; China is a major purchaser of Ukrainian corn and wheat.”

And Steven Lee Myers reported in Monday’s New York Times that, “China has already lifted some restrictions on Russian wheat imports, but it has yet to indicate whether it will abide by American and European sanctions meant to restrict Russia’s access to capital.”

Keith Good Photo

Keith Good is the Farm Policy News editor for the farmdoc project. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.

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