By now you have heard about the Russian invasion of Ukraine. As of last night, Russia abandoned all pretense and launched troop incursions and rocket attacks throughout the entire country of Ukraine, including its capital, Kyiv.
While the world awaits any official international action or intervention, the markets around the globe are reacting quite quickly. This action by Russia not only puts stress on the general world economy, but it also has a large effect on the global food supply. Not only will this affect the Ukrainian agriculture industry, but everybody else?s as well.
Jim McCormick is a Hedging Strategist with AgMarket.Net. He talks about the knee-jerk reaction we saw overnight. While it is a quick response to the situation, McCormick adds that there is good reason for the grain markets to be unstable, given the number of grain exports Ukraine accounts for.
Of course, the next question you must ask is about how far this market could go. Is the sky the limit? Is this temporary? Jim gives us his thoughts on where this can go short-term.
While the market jumps may only be short-term, producers can take advantage for the long-term. McCormick says now is a good time to look at your marketing plans beyond 2022; think 2023 and 2024.
Now, while the outlook may be positive for those of us selling and marketing grain in the short term, not all of this is good news in the agriculture industry. Belarus & Russia are big exporters of fertilizer and Belarus is allowing Russia to invade Ukraine from its borders. This means any retaliation by the U.S., or its allies, could bring stiff price shifts in an already high marketplace.
And what about China? We already know that the Chinese are officially in support of Russia?s moves because they have a country they want to annex, as well, in Taiwan. This could erupt into a geopolitical nightmare that has implications for the whole world and can really impact the supplies of goods that we use to produce agriculture. Not to mention this can impact how the world trades with both countries.