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We will all soon feel the \u201cenormous impact<\/a>\u201d of Russia\u2019s war on Ukraine with sharply higher food prices and significant disruption to agricultural supply chains. The situation is tipping into a full-blown crisis<\/a>, potentially outstripping the Covid pandemic\u2019s blow and pushing millions more into hunger.<\/p>\n The head of the World Food Programme agrees that the conflict could have a catastrophic impact<\/a> on the world’s poorest, putting more people at risk of starvation worldwide. He added that \u201cthe bullets and bombs in Ukraine could take the global hunger crisis<\/a> to levels beyond anything we\u2019ve seen before.\u201d<\/p>\n Goldman Sachs has said the world\u2019s farmers have little spare capacity<\/a> to increase acreage while crop nutrients are too expensive to increase yields.<\/p>\n The FT argues<\/a> that the US farmers will be especially limited, writing, \u201cAfter a poor harvest last year, domestic wheat stocks are at their lowest level in 14 years. Farmers have already seeded 34.4mn acres with winter wheat, which accounts for the majority of US production, and there is a worsening drought in important winter wheat states such as Kansas.\u201d<\/p>\n China’s agriculture minister has said that China\u2019s winter wheat crop<\/a> could be the “worst in history.\u201d He explained that heavy rainfall last year delayed the planting of about one-third of the regular wheat acreage.<\/p>\n AgResource has reduced its estimate for Brazilian soybean production<\/a> to 119.5 mln mt. The company said that when you factor in potential losses in Argentina and Paraguay, 40 mln mt of soybeans could be lost due to poor weather.<\/p>\n Russia\u2019s Prime Minister has said that he will prioritize grain supplies<\/a> to domestic bakeries over export markets. The Russian government is already considering banning all grain exports<\/a> to the Eurasian Economic Union until September.<\/p>\n Ukraine’s government has banned exports<\/a> of rye, barley, buckwheat, millet, sugar, salt, and meat until the end of this year. Earlier, the country had introduced export licences<\/a> for wheat, corn and sunflower oil, poultry, and eggs.<\/p>\n Egypt has banned the export<\/a> of essential staples, including flour, lentils, wheat, pasta and fava beans. The government has meanwhile blamed greedy traders<\/a> for rising food prices.<\/p>\n Indonesia has said it will further restrict palm oil exports<\/a> to increase domestic supplies. LMC International has described cooking oils as facing a perfect storm<\/a>, with as much as 60 per cent of sunflower oil exports from the Black Sea region delayed due to the war.<\/p>\n The UN FAO has warned that \u201cbefore enacting any measures to secure food supply<\/a>, governments must consider their potential effects on international markets.\u201d The FAO added that \u201crestrictions could help to resolve individual country food security challenges in the short term, but they would drive up prices on global markets.\u201d<\/p>\n China\u2019s President Xi Jinping has said that China can no longer rely on international markets<\/a> to ensure food security and should focus on domestic production.<\/p>\n Asia\u2019s preference for rice<\/a> over wheat could limit the fallout from reduced Black Sea wheat exports. Food inflation is relatively contained in Asia, thanks to the popularity of rice and falling pork prices.<\/p>\n Cargill and ADM are scaling back their business activities<\/a> in Russia but will continue to operate “essential” food facilities there. In a statement, Cargill said, “Food is a basic human right and should never be used as a weapon.”<\/p>\n Skyrocketing prices force physical commodities trading houses to seek additional financing<\/a> for margin calls on their hedge positions.<\/p>\n Nestle and Mondelez have followed Procter & Gamble and Unilever in halting investment in Russia<\/a>. However, the four companies will continue providing essentials to maintain “continuity” of the Russian food supply.<\/p>\n Higher fuel prices and increased transport costs could add to the already sharp rise in world coffee prices<\/a>.<\/p>\n In shipping, Maersk is looking to divest its minority interest<\/a> in Russia\u2019s largest terminal operator.<\/p>\n Meanwhile, the war may lead to a global crew shortage<\/a> as Ukrainians and Russians account for nearly 15 per cent of the industry\u2019s 1.9 million seafarers and a high proportion of its officers and ranked crew. Ukraine has conscripted men under 60 and forbidden them to leave the country. Some 140 ships and 1,000 workers are trapped in Ukraine waters, although Russia appears to be letting some ships carrying grains leave the Azov Sea<\/a>.<\/p>\n Consolidation continues in the container-shipping sector,<\/a> with Hapag-Lloyd acquiring the container liner business of Deutsche Afrika-Linien (DAL).<\/p>\n The Brazilian government has presented a National Fertilizer Plan<\/a> to reduce the country’s dependency on imports from 85 per cent of its demand to 45 per cent. Brazil is the world\u2019s fourth-biggest importer of fertilizer.<\/p>\n Norway’s Yara, one of the world’s largest fertilizer makers, is curtailing ammonia and urea output in Italy and France<\/a> due to the surge in natural gas prices.<\/p>\n In environmental news, new research finds that three-quarters of the Amazon rainforest may be speeding toward a “tipping point<\/a>” that could transform it into a relatively dry savanna.<\/p>\n A new report<\/a> estimates that in the US in 2018, around 235 million pounds of herbicides and insecticides<\/a> were used on corn and soy crops destined for factory-farmed animals.<\/p>\n The Guardian writes that the US beef industry<\/a> has escaped relatively unscathed from the US President\u2019s pledge to cut methane gas emissions by 30 per cent by 2030.<\/p>\n Reuters reports that US ethanol producers<\/a> are betting on carbon capture and storage (CCS) technology to lower their greenhouse gas emissions.<\/p>\n Maersk wants to jump-start the green methanol<\/a> market to help them ditch fossil fuels. The company could buy at least 730,000 tons of methanol per year by 2025.<\/p>\n Bloomberg Green has an excellent video<\/a> on how technology could help the global shipping industry \u2018go green\u2019.<\/p>\n Finally, Visual Capitalist has a good piece on the enormous scale of US food waste<\/a>.<\/p>\n \u00a9 Commodity Conversations \u00ae 2022<\/p>\n Many of the above links require subscriptions. Please support quality journalism.<\/p>\n![\"\"](\"https:\/\/i0.wp.com\/commodityconversations.com\/wordpress2\/wp-content\/uploads\/2022\/01\/Image-28.01.22-at-11.41-1.jpeg?resize=525%2C66&ssl=1\")
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