Russia's recognition of two separatist Ukraine provinces as independent countries, and its military move into the region, could presage a full-scale war that is already affecting world markets for grain, energy and fertilizer.
"With the two countries accounting for around 29 percent of global wheat exports, 19% of world corn supplies, and 80% of world sunflower-oil exports, traders worried that any military engagement could impact crop movement and trigger a mass scramble by importers to replace supplies from the Black Sea region," report Naveen Thukral and Gavin Maguire of Reuters, "Chicago wheat futures jumped more than 2% on Tuesday, corn hit a seven-month high and soybeans also gained ground."Reuters quoted an unnamed trader as saying that ships are avoiding the Black Sea, but Bloomberg reported that "Cargoes are flowing freely and there's no indication of significant disruptions."
Fertilizer prices, already at record highs and threatening farmers' profit margins, may increase even more because Russia is a major exporter of fertilizer. "If Russia invades Ukraine, and the U.S. and other North Atlantic Treaty Organization countries retaliate with trade sanctions, that could cause shortages and drive up prices," Andrew Ozaki reports for Omaha's KETV.
The Associated Press reports that Agriculture Secretary Tom Vilsack said Saturday that "American wheat farmers will boost production and prevent supply chain problems in the event that a possible Russian invasion of Ukraine chokes off agricultural exports from the global grains powerhouse."
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