Looming food shortages

Investment Analysis Clubs Macro Economic Trends and Risks
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Looming food shortages is the next ‘slow-moving disaster’ to hit world
https://nypost.com/2022/03/17/looming-food-shortages-is-worl…
That problem is shortages of food and fertilizer brought about by the Russian invasion of Ukraine and the sanctions enacted by the West in response. Ukraine is a major wheat producer, but war is likely to ensure a poor spring planting and harvest. Russia is also a major grower, but sanctions and war will prevent it from exporting to most of the world…

The Green Markets North American Fertilizer Index, already high, jumped 16% last Friday. Urea, a major fertilizer ingredient, went up 22%. Potash, another major ingredient (Russia is the top producer), increased 34% in Brazil, the world’s leading fertilizer importer. The price for standard “starter fertilizer” 10-34-0 is up 49% from a year ago and likely to go much higher…Then, too, there are skyrocketing prices for gasoline and diesel, which are essential for today’s mechanized farming and for getting food to consumers.

DB2
Long MOS

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The Green Markets North American Fertilizer Index, already high, jumped 16% last Friday. Urea, a major fertilizer ingredient, went up 22%. Potash, another major ingredient (Russia is the top producer), increased 34% in Brazil, the world’s leading fertilizer importer. The price for standard “starter fertilizer” 10-34-0 is up 49% from a year ago and likely to go much higher…Then, too, there are skyrocketing prices for gasoline and diesel, which are essential for today’s mechanized farming and for getting food to consumers.

DB2
Long MOS

Not even close!

Potash Canada
Potash is primarily used to produce fertilizer. Canada is the world's largest producer and exporter of potash. Canada has the world's largest potash reserves, with 1.1 billion tonnes of potash (potassium oxide equivalent).Feb 3, 2022

World production of potash (potassium chloride), 2011–2020 (p)
Ranking	Country	Potassium oxide equivalent (million tonnes)
1	Canada	1,100
2	Belarus	750
3	Russia	600
4	China	350

https://www.cbc.ca/news/canada/saskatchewan/nutrien-potash-p…

Saskatchewan
Sask. fertilizer company ramping up potash production in response to Ukraine crisis

Nutrien says it will hire more workers for its network of potash mines in Sask.
CBC News · Posted: Mar 17, 2022 10:19 AM CT | Last Updated: March 17

People also ask
Why does Canada have so much potash?
The potash deposits tucked more than a kilometre beneath Saskatchewan were formed after an inland sea evaporated some 400 million years ago. It was a busy time - fish were making their way onto land and plants were taking advantage of stable soil to sow seeds for the first time. Nov 5, 2010

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Fritz Haber received a Nobel Prize for invention of a process to react hydrogen with nitrogen in the air to make ammonia. Ammonia in turn can be converted to urea or nitric acid/nitrates. Nitrogen fertilizers are readily available but price depends on the cost of energy.

Potash is abundant in Canada (Mosaic also mines there) and in Carlsbad, NM and elsewhere in the west.

Phosphates are mined in Florida.

The minerals are available in spite of strict environmental laws that discourage mining.

This is mostly a production capacity issue. But would you invest to expand knowing that the war could end and things could return to normal with idle excess capacity.

The shortages could be temporary.

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The minerals are available in spite of strict environmental laws that discourage mining. This is mostly a production capacity issue. But would you invest to expand knowing that the war could end and things could return to normal with idle excess capacity? The shortages could be temporary.

Do you think these shortages will be corrected in time to avoid food shortages this year? It seems unlikely to me.

DB2

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Russian troops seize agricultural assets in Ukraine
www.spglobal.com/commodity-insights/en/market-insights/lates…
Russian troops in Ukraine are seizing and destroying agricultural machinery, fertilizer, seeds and fuel stocks, according to several farmers in Ukraine, putting in danger the new crops from one of the world’s most important suppliers of wheat, corn and sunflower oil. The actions of the Russian troops are also putting at risk the spring planting campaign and the yields of winter crops – wheat, barley, rapeseed etc – which were planted at the end of summer and autumn 2021…

One of Ukraine’s biggest agroholdings Harveat has lost control over 98,000 hectares in the Donetsk region, in the eastern part of the country. The company also has limited access to the remaining 22,000 ha which is situated in Kiev, 70% of which is within the fighting zone…Agrogeneration – another agroholding, which operates lands in Kharkiv region – also reported difficulties in implementing field work due to its proximity to the fighting. The company has been experiencing difficulty in purchasing agricultural inputs…

Russian troops had also targeted agricultural machinery in other parts of Ukraine, according to farmers working with different trading companies. Spring crops, corn and sunflower seeds in particular, may be planted on 30%-40% of the initially planted area in Ukraine while winter crops – wheat and barley – may see lower yields, according to several sources on the ground.

DB2

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Russian troops in Ukraine are seizing and destroying agricultural machinery, fertilizer, seeds and fuel stocks, according to several farmers in Ukraine, putting in danger the new crops from one of the world’s most important suppliers of wheat, corn and sunflower oil. The actions of the Russian troops are also putting at risk the spring planting campaign and the yields of winter crops – wheat, barley, rapeseed etc – which were planted at the end of summer and autumn 2021…

Scorched-earth tactics… frequently used by Russians in past wars… while they were retreating.

Something else occurred to me. According to some source, Putin is claiming that certain Ukrainian militia groups are neo-Nazi and wants to exterminate those groups and their supporters and sympathizers (as identified by Putin).

Killing people for the political beliefs others attribute them… sounds rather neo-Nazi to me…

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Putin is claiming that certain Ukrainian militia groups are neo-Nazi

I have been seeing increased chatter on the net about the Azov Regiment, which aligns (the chatter), to a degree, with Putin’s talking points:

The Azov Special Operations Detachment (Ukrainian: ??? ??? ??? ??? «???», romanized: Okremyi zahin spetsialnoho pryznachennia “Azov”), also known as the Azov Detachment, Azov Regiment (Ukrainian: ??? ???, romanized: Polk Azov), Azov Battalion (until September 2014), or simply Azov, is a right-wing extremist,[1][2] neo-Nazi,[3][4][5] formerly paramilitary unit of the National Guard of Ukraine,[6][7][8] based in Mariupol, in the Azov Sea coastal region.[9] Azov initially formed as a volunteer militia in May 2014,[10] and has since been fighting Russian separatist forces in the Donbas War. It saw its first combat experience recapturing Mariupol from pro-Russian separatists in June 2014.[6] On 12 November 2014, Azov was incorporated into the National Guard of Ukraine, and since then all members have been official soldiers serving in the National Guard

https://en.wikipedia.org/wiki/Azov_Battalion

I do not have printed, therefore uneditable after the fact, information at my fingertips, confirming what Azov troops are charged with, that was published before Putin started his narrative.

I would point out that ultra-nationalism, and more than a tint of racism, are common, in Putin’s Russia, in Hungary, and among some factions in Shinyland.

So, show me the bodies. Prove Azov is worse than Putin.

Steve

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warrl

The actions of the Russian troops are also putting at risk the spring planting campaign and the yields of winter crops – wheat, barley, rapeseed etc – which were planted at the end of summer and autumn 2021…

Scorched-earth tactics… frequently used by Russians in past wars… while they were retreating.

Russkies. Gotta hand it to 'em. Sharpest knives in the drawer.

Then, if they finally “win”. What will they win?

A SMOULDERING CINDER OF SOME GEOGRAPHY THAT USED TO BE A COUNTRY?

Room temperature IQ’s can be the only explanation. Weapon’s grade morons.

Hard to see how Vlad survives, no matter how it turns out.

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https://finance.yahoo.com/news/fertilizer-prices-just-hit-re…
Farmers worldwide are feeling the sting of sanctions, as the Ukraine War has sent fertilizer prices soaring to new all-time highs, prompting concerns over a global food shortage.

The surge in fertilizer prices reveals how dependent many of the world’s farms are on Russian exports. Countries already afflicted by food insecurity now risk further production bottlenecks and food shortages at the worst possible time.

https://kvia.com/news/new-mexico/2022/03/21/local-farmers-ar…
The price of gas and fertilizer have nearly doubled - two materials necessary for Roque on the pecan farm he manages in Anthony, New Mexico.

“It’s costing more money to run the equipment, to run the wells and to be able to produce pecans, or any other agriculture product,” Roque said.

According to ABC News, fertilizer right now is $879/ton; in March of 2021 it was $609/ton and back in March of 2020 it was $409/ton.

It’s a similar situation when we look at gas - right now the country is seeing startlingly high prices due to the Ukraine war.

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We’re Not Facing a Global Food Crisis
https://agdatanews.substack.com/p/were-not-facing-a-global-f…
This will have a big effect on world agricultural markets, but not that big. The US government should not incentivize additional production in response…Russia accounts for 19% of the global wheat export market and Ukraine 9%. Ukraine is also a major corn exporter, accounting for 14% of exports. Neither country is a large player in rice or soybeans…

Based on the observed price increases, we can infer how much grain that traders think the world has lost. In doing so, it is important to account for any substitutions across crops…They found that, for every 1% decrease in calories from these commodities, the average price increases by 7%…Using the Roberts and Schlenker factor of 7, this implies a 2.2% decrease in available supply of calories. Removing 55 million metric tons of wheat and 30 million metric tons of corn entails a 2.7% reduction in available supply of calories from the big four commodities…Traders expect this shock to last only a year. Winter wheat futures prices for delivery after July 2023 barely increased after the invasion…

The increase in wheat prices will not cause massive increases in the price of American bread. Most of the price of food is determined by the cost of processing, packaging and marketing. The USDA estimates that farm gate sales of food commodities made up 14% of the retail value of food in 2019. If farm prices increase by 50%, then we would expect food in the grocery store to increase by 7%.

DB2

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Feeding the 72 million: Egypt’s grand wheat plan splits the industry
www.middleeasteye.net/news/egypt-grand-plan-wheat-splits-ind…
On Wednesday, authorities introduced measures they hope will incentivise Egyptian growers to sell more wheat: raising prices, setting quotas, and threatening farmers with prison if they do not deliver…While some smaller producers are glad for the measures, others fear the decision will hurt the private sector and wipe out the livelihoods of the country’s wheat traders…

The new price is around 400 pounds ($25) a tonne less than the price in the international market. Egypt is by far the world’s largest importer of wheat. It gets almost 80 percent of its supply from Russia and Ukraine…The country spends billions of pounds annually on a vast bread subsidy scheme for tens of millions of people living on rations…

Firstly, the government has offered incentives to local wheat producers to encourage them to sell their produce to the government instead of the private sector. Secondly, the ministry of supply now requires growers to sell a certain amount to government-affiliated buyers.

DB2

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India’s farmgate fertilizer prices may see sharp increase amid severe shortage
www.spglobal.com/commodity-insights/en/market-insights/lates…
India has been facing severe shortage of supply since the tensions between Russia and Ukraine started escalating in late February. Russia, which accounts for around 13% of global fertilizer production, is a key supplier of several varieties of fertilizers to the world, including India. It temporarily banned fertilizer exports earlier this month, which gave a boost to already higher fertilizer prices, analysts said…

So far, farmers are facing challenges in procuring non-urea fertilizers such as di-ammonium phosphate (DAP), muriate of potash (MOP) and nitrogen-phosphorus-potassium (NPK) varieties…“We can still make further imports to close the gap in demand and supply as we have some time left before the sowing season is expected to begin,” another official said. India usually starts plantation for kharif crops in June-July…

India has been considering working out a mechanism to pay Russia in Indian currency. Under the proposed system, ruble could be deposited in an Indian bank account after converting it to rupee or vice versa…“If the government does not increase subsidy, the farmgate prices will increase and will also translate into inflation. The farmer might also shift to other alternative fertilizers such as SSP,” Patni said. A sharp rise in fertilizer prices may lead to a decrease in sowing area in summer pulses, like pigeon pea, and oilseeds like groundnut and soybeans.

DB2

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The agricultural trends will last long enough to still be actionable for investors.

www.spglobal.com/commodityinsights/en/market-insights/latest…
The historically high food and agriculture commodity prices are likely to sustain for multiple upcoming seasons driven by various factors like the Russia-Ukraine conflict and high farm input prices, economist with United Nations Food and Agriculture Organization, Monika Tothova said in an interview with S&P Global Commodity Insights.

“It is very likely that food prices are going to stay elevated, given by the supply and demand shock but also by the higher cost of agriculture inputs,” Tothova said.

“It is difficult to say how long the high food prices can last because we need to see how long the Russia-Ukraine conflict is going to last, but even if the goal was to finish immediately, it will take some time for the exports to go back to pre-war levels, and we will still have the high input prices,” said Tothova. “It is likely to be for a while – we are talking about seasons rather than months of high prices,” she added.

DB2