“The conflict in Ukraine and other factors contributing to high commodity prices and food insecurity” • Agriculture Policy News

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In a report last week, “The conflict in Ukraine and other factors contributing to high commodity prices and food insecuritythe USDA Foreign Agricultural Service (FAS) reported that “a number of factors converged above last 18 months to send world prices of agricultural products to levels close to record.” Today’s update includes some highlights from the report.

“The Conflict in Ukraine and Other Factors Contributing to High Commodity Prices and Food Insecurity,” USDA – Foreign Agricultural Service (April 6, 2022).

The FAS update stated that “Russia’s invasion of Ukraine comes at a time when global food and energy prices are already high. In the last 18 months, wheat prices have increased by nearly 110%, but and vegetable oil prices are up to 140 percent, and soy the prices are up to 90 percent. Overall, agricultural commodity prices have been on an upward trend since the second half of 2020, fueled by strong global import demand (especially from China), global supply reduced due to northern hemisphere droughts in the summer of 2021, and stock tightening in the main exporting countries. These developments have occurred as global economic growth rebounded from pandemic control measures. crude oil and natural gas prices began to soar, reflecting the economic recovery. High energy prices have increased fertilizer costs, other inputs and transportation. Russia’s attack on Ukraine has disrupted Black Sea agricultural exportss, pushing prices higher, and exacerbating high energy and fertilizer costs. Trade policies in response to war-induced market volatilities, in particular export restrictionsfurther drive up food prices.

“The Conflict in Ukraine and Other Factors Contributing to High Commodity Prices and Food Insecurity,” USDA – Foreign Agricultural Service (April 6, 2022).

Regarding fertilizer prices, FAS explained that “Russia, Chinaand Canada rank first, secondand Fourth among the words fertilizer exporters. (The United States ranks third.) In addition to increased energy costs, several other developments in these countries have caused fertilizer prices to skyrocket. In November 2021, Russia introduces a six-month period export quota nitrogen fertilizers and complex nitrogen fertilizers. around the same time, China bans phosphate exportsa major component of commercial fertilizers, until at least June 2022. Additionally, a peak Ammonia prices and some potash supply disruptions in Canada also contributed to higher fertilizer costs.

“The Conflict in Ukraine and Other Factors Contributing to High Commodity Prices and Food Insecurity,” USDA – Foreign Agricultural Service (April 6, 2022).

Specifically on agricultural commodities, the FAS pointed out that, “At the aggregate level, world wheat production was adequate in 2020/21 and only 1% below consumption needs in 2021/22. However, wheat stocks of major world exporters have tightened in recent years as international trade has developed. Stocks of major exporters in 2021/22 are expected to be at their lowest levels in 10 yearsputting upward pressure on world prices. China is one of the first countries to increase its imports, with doubling of import volume in 2020/21 as state trading enterprises helped replace and replenish aging government reserves and demand for feed-grade wheat also increased.

“The Conflict in Ukraine and Other Factors Contributing to High Commodity Prices and Food Insecurity,” USDA – Foreign Agricultural Service (April 6, 2022).

FAS added that, “For butstrong demand, especially Chinahelped keep high prices. Strong demand for animal feed propelled China to become the world’s largest maize importer in 2020/21, accounting for 16 percent of world trade that year, compared to an average of three percent in the previous decade. China’s import demand in 2021/22 remains well above historical standards. Shares in the main maize exporting countries (United States, Brazil, Argentina and Ukraine) should be the lowest since 2012/13.”

“The Conflict in Ukraine and Other Factors Contributing to High Commodity Prices and Food Insecurity,” USDA – Foreign Agricultural Service (April 6, 2022).

With regard to soybeans, the report states that “Soybean prices have been rising since late 2020Guided by aggressive buying in china. Stocks in Argentina, Brazil and the United States have since tightened, pushing up prices. For the current marketing year (2021/22), the worst drought in decades affected parts of soybean growing areas South America during a critical phase of crop development, reducing crop prospects and increasing the prices of beans, flour and oil.

Last week’s report also noted that “high prices are an important signal to producers plant more crops. The timing of the conflict in Ukraine poses challenges for the response of Northern Hemisphere winter wheat production from the the crop was planted several months ago and will be harvested in a few months. High prices may stimulate additional plantings of spring wheat in the northern hemisphere or winter wheat in the southern hemisphere.

“For agricultural producers around the world, high fertilizer and fuel prices are a major concern. Some producers will also face higher interest ratesfurther increasing production costs and potentially affecting planted acreage. from Brazil the most pressing concern for 2022/23 is fertilizer availability and price, as the country is dependent on imports for more than 80 percent its fertilizer needs. Reducing fertilizer use threatens to reduce future crop yields.

The FAS report stated that “prospects for spring planting and winter harvest in Ukraine remain uncertain. In addition to disruptions directly related to the war, growers could face limited supplies of fuel and inputs, which could reduce plantings and potential yields.

“The U.S. Department of Agriculture will release its official forecast for Agricultural campaign 2022/23 production, supply and demand on May 12.

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