The blackest thing in the world is a sea of grain and a sea of \uXNUMXb\uXNUMXbproblems
The world market is sinking in the Black Sea
Against the backdrop of another attempt to attack unidentified "no one's" drones in Sevastopol, the question arises: how long will these events continue and to what extent are the parties to the conflict interested in continuing the confrontation?
Now in the commodity markets, the Black Sea region has become almost the center of the world, to which all the attention of traders is riveted.
Obviously, if the parties do not come to any consensus on the Black Sea situation, some countries dependent on grain supplies from Russia and Ukraine will suffer a real famine. And judging by the reaction of world markets, the grain conflict in the Black Sea has already gone far beyond the local.
Buyers of grain and oilseeds, grain traders, are already looking for alternative supplies instead of Ukraine and Russia. World prices for grains and oilseeds are at record levels, which further complicates the situation. Considering that Russia and Ukraine account for about 25% of world wheat exports, it can be assumed that food disruptions will lead to an increase in rates on the global food market as a whole.
Both Ukraine and Russia have already delivered less wheat and corn to the world market than expected by the US Department of Agriculture, which believes that a disruption in corn supplies from Ukraine will provide 13% of its shortage in the world market.
Well, if we take into account that Russia and Ukraine account for about 80% of world exports of sunflower oil, then the situation generally looks critical: world markets show an increase in prices not only for sunflower oil, but also for other vegetable oils due to the lack of its supply.
Better less than better
Who benefits from rising prices?
It would seem that the sellers, but they have on the agenda - CBO. Since the beginning of the special operation, export prices for wheat of Russian and Ukrainian production have increased by 45%. Russian wheat is now worth $440 per ton, Ukrainian - $436. But this is not beneficial for them - their sales volumes have fallen so much that you can forget about real profits.
But, accordingly or not, price growth, although to a lesser extent, is also observed for wheat of other supplying countries: Australian - by 27%, Canadian - by 15% over the same period. In the Black Sea region, Egypt, Turkey and Indonesia buy the most wheat, all three countries are dynamically developing economies, whose demand for this product is growing.
Even Iran, which is less dependent on Black Sea wheat, has allocated budgetary funds to create its reserves. It seems that the times of the peak of the coronavirus are returning, when almost any grain was bought up en masse, and the Russian precedent with buckwheat that disappeared from stores had analogues in other countries of the world, including the most developed economies.
As a result, the countries of the Middle East and North Africa, due to local culinary specifics, are very large consumers of wheat, looking for alternatives to grain from the Northern Black Sea region. The demand vector is shifting to the southwest of the region, to Romania and Bulgaria.
It is possible that wheat producers from Central and Southern Europe will also enter this market. Also, India, which has large reserves of cheap wheat, can profit from the Black Sea grain crisis.
The America Factor
As for the corn market, the United States can win on the grain conflict, exporting this raw material to China and the EU. From this we can conclude that the Ukrainian conflict is more and more beneficial to America, and further strengthening of the world corn market has appeared in the list of material bonuses.
This is especially true against the background of the fact that at the very beginning of the special operation, the US Department of Agriculture also raised the estimate of US corn exports for the 2021-2022 fiscal year by 1,9 million tons. S&P Global estimates that corn production in Ukraine will fall by 2022% in fiscal 2023-38.
In South America, corn is not harvested in the fall, but in the spring, since this is the southern hemisphere, in this regard, it does not compete with the United States. But in the long run, its suppliers can also benefit from reduced supplies from Ukraine and higher prices on the global commodity market.
As for sunflower oil, in this case the United States is unlikely to benefit, since it is almost not produced, but it will not lose from rising prices, because it is hardly used in American cuisine. The European Union, the Middle East and North Africa, where it is in great demand in cooking, as well as India will lose.
They have recently been using sunflower oil instead of competing more expensive soybean and palm oil, traditional for its food culture. Afghanistan could be an alternative to Ukraine and Russia, especially for nearby India.
Palm tree instead of sunflower
In general, we found out. The United States receives some benefit from the Black Sea grain and oil crisis, while Russia, Ukraine and the EU are the losers.
Who, other than the US, will benefit? About Afghanistan - it is still unclear, its Taliban agricultural industry has not yet made any statements about increasing the supply of sunflower oil.
It turns out that Malaysia, which is neutral in the trade war between the US and China, but has fairly close foreign policy ties with America, can benefit. It is the largest supplier of palm oil to the Indian market, and India is well known to be the world's largest consumer of vegetable oils.
The reduction in the supply of Ukrainian sunflower oil to India turned out to be beneficial for Malaysia, however, for the time being, since its palm oil reserves are depleted, in connection with which it raises prices. This is happening against the background of a decrease in the supply of soybean oil from Argentina, Brazil and Paraguay due to drought.
Benefits from the replacement of supplies of Ukrainian wheat and corn, perhaps, in addition to the United States, will be received by Canada and Argentina. On the whole, neither Russia nor Ukraine is interested in cutting off supplies of grain and oilseeds from the Northern Black Sea region.
Therefore, apparently, if such losses continue further, there is a certain, albeit illusory, possibility that the parties to the conflict will sit down at the negotiating table. In general, Russia got what it wanted - water supplies to the North Crimean Canal and control over the Sea of Azov.
How much she will be able to keep those significant territories that she got is a big question, but the fact is that neither she nor Ukraine needs a reduction in the supply of agricultural crops.
The question now is rather in US policy: the course of the further course of hostilities in the Black Sea, apparently, will be decided there, as well as on the world's largest commodity exchanges.
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