Lingling Wei, Brian Spegele and Wenxin Fan reported on the front page of today's Wall Street Journal that, "Protests are erupting in major cities in China over President Xi Jinping‘s zero-tolerance…
Jack Nicas and André Spigariol reported in today’s New York Times that, “When the first Russian missiles struck Ukraine, the reverberations were felt 6,500 miles away, on the vast Brazilian farms that grow much of the world’s soybeans.
“Russia supplies a quarter of Brazil’s fertilizers, and sanctions meant to punish Moscow for its invasion threatened to trap the crucial commodity from being exported. That posed a danger not only to the Brazilian economy, but also to the world’s ability to feed itself.
“Within days, Brazilian officials warned farmers to cut back on a critical fertilizer, and experts forecast that the country — one of the largest exporters of corn, soybeans, sugar and coffee — had just three months before it ran out.
Now, two months later, Brazil is replenishing its fertilizer stockpiles — with help from Russia. Much like the Russian gas that has been flowing through pipelines into Europe, hundreds of thousands of tons of Russian fertilizer have arrived in Brazil since the invasion. And more is on its way.
Nicas and Spigariol explained that, “Brazil scrambled to buy Russian fertilizer just ahead of the invasion to keep shipments coming early in the war. And though the purchase of Russian fertilizer itself has not been banned, Brazilian buyers have had to contend with sanctions on Russian banks and logistical hurdles that experts feared would still cut off trade.
“But buyers have managed to find ways around those obstacles, including using a Russian bank excluded from sanctions and getting an assist from Citigroup in New York.”
Today’s article pointed out that, “Russia also accounts for roughly 15 percent of the world’s fertilizer exports. Blocking those exports would deprive [Russian President Vladimir V. Putin] of another revenue stream that can fuel Russia’s war against Ukraine. But United Nations officials and other experts have warned that restrictions on Russian fertilizer would raise prices even more and deplete food supplies.
“Facing the prospect of such a crisis, the United States created a carve-out in its sanctions in late March to explicitly allow purchases of Russian food and fertilizer. While financial sanctions are still complicating transactions, American officials have been working to reassure other governments and business leaders — including meeting with government and industry officials in Brazil — that buying Russian fertilizer is not prohibited.”
Meanwhile, Wall Street Journal writers Drew Hinshaw and Alistair MacDonald reported late last week that, “Poland and Lithuania are in talks with Ukraine to have the war-torn country export its summer grain harvest through their ports, circumventing Russia’s naval blockade in the Black Sea and helping relieve what the United Nations predicts to be the worst global food crisis since World War II.
“The plans, described in an interview by Poland’s President Andrzej Duda and several Polish, Lithuanian and Ukrainian officials and diplomats, are an attempt to bolster Ukraine’s struggling economy, which depends heavily on exports of wheat, mostly harvested in late summer. Russia’s military has besieged the now desolate port of Mariupol and its navy has blocked access to the Black Sea lanes to other ports, like Odessa.”
The Journal article noted that, “To move Ukraine’s wheat out to global markets, Poland would make space available at its seaports in Gdansk, Gdynia and Szczecin, and put those ports at the disposal of Ukraine, said Mr. Duda. Lithuania has made the same offer, he added, which was confirmed by a spokeswoman for Lithuania’s foreign ministry. The two countries are also looking to create port space for sunflower oil, of which Ukraine is the world’s biggest producer.
“The bigger issue, he said, beyond storing and shipping the grain, is to transport it out of Ukraine, which has seen extensive damage to its rail network.”
In other news, Reuters writers Hallie Gu and Dominique Patton reported today that, “China’s soybean imports in April climbed from a month ago, helped by the arrival of cargoes delayed by poor weather and slow harvests in South America, customs data showed on Monday.
“The world’s top soybean importer brought in 8.08 million tonnes of the oilseed in April, up 27% from 6.35 million in March, data from the General Administration of Customs showed.
“The figures were also up from 7.45 million tonnes in the same month a year earlier.”
And Bloomberg writer Alfred Cang reported yesterday that, “China’s hog prices are rebounding after a prolonged slump, but it’s probably too early to call it a turning point as demand in the world’s biggest pork consumer faces constraints, including from Covid lockdowns.
“Futures on the Dalian Commodity Exchange jumped almost 4% on Monday to their highest close since July for the rolling, most-active contract. Still, prices are down 23% over the past year because of aggressive expansion of the herds after the industry was ravaged by African swine fever.”
Cang added that, “China’s hog breeders have been squeezed by rising costs of animal feed ingredients such as soybean meal and corn, as well as the slump in pork prices. Destocking is happening slowly and Fitch Ratings said it doesn’t expect hog prices to rebound materially until the second half of the year.”
Also yesterday, Dow Jones writer Stephen Wright reported that, “New Zealand dairy exporter Fonterra Cooperative Group Ltd. said China’s Covid-19 lockdowns, the Russia-Ukraine war and Sri Lanka’s economic crisis have hit global demand for dairy commodities.
“The company on Monday lowered the midpoint of its farm gate milk-price forecast for the 2021-22 production season to 9.30 New Zealand dollars ($5.96) a kilogram of milk solids from NZ$9.60. The forecast payment to its New Zealand suppliers would still be a record high.”