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The war on grains

What's really going on?


Soybean oil



Wheat


At present, the focus on US and global weather has diminished due to the escalating geopolitical tensions between Russia and Ukraine. This situation has significant implications for grain prices.


While the media heavily covered the breakdown of the grain corridor deal between Russia/Ukraine and the rest of the world, it may not have a major impact on Ukraine's grain export capabilities. They have developed alternative transportation methods through land routes and the Danube river, which can compensate for the loss of movement through the Black Sea.


However, recent reports of Russia's attacks on Danube river ports and agricultural infrastructure in Ukraine are causing concern. If the flow of grain via the Danube river is disrupted, it could lead to a significant increase in grain prices.

Moreover, the European Union has been resistant to Ukraine's land-based grain movement to protect their own grain interests. This resistance is likely to slow down the transportation of grain over land.

There's a possibility that Ukraine, with NATO's support, may retaliate and try to impede the movement of Russian grain exports. Such actions could further exacerbate the risk to grain markets.


It's important to note that predicting developments in this situation is challenging, and the volatility in grain prices will be influenced not only by geopolitical events but also by natural factors. The current US weather is leaning towards a more bullish outlook.

Adding to the complexity, India, the world's largest rice exporter, has recently banned rice exports, potentially contributing to a humanitarian food crisis.


In contrast to a previous situation in 2022, where India's abundant rice exports helped stabilize global food security during the Russian/Ukraine conflict, this time, India's ban on rice exports has intensified concerns about the world's food supply for a significant portion of the population.


Historically, such conditions have triggered global conflicts as food scarcity leads to social unrest. This precarious situation demands attention.

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