Ukrainian war is adding pressure to producers. When will it stop?

The war in Ukraine is adding more pressure to the markets, and for farmers, a difficult part is not knowing what final impact will be.

Uncertainty is the name of the game with the war in Ukraine. Global Commodity Analytics President Mike Zuzolo says it really depends on who wins.

“I mean, this is where it goes back to how big does the war get? Does NATO get involved because it goes from two countries who are being supported by a lot of countries, or does this expand into a NATO and China and Syria and Iran conflict, where it’s more regional? And therefore, then, it could bloom or blossom into almost a full-scale World War? I think that is something that the trade is starting to consider, and I think they should.”

Zuzolo says there are other factors causing upward pressure to the markets.

“You know you have the hard-red wheat drought, you have the E15 blend increase in the summer, you have the corn planting delays that are starting to increase and put more pressure on a marketplace that is expecting bigger acres than the very small acres that USDA gave us at the end of March. And then you have the soybeans supported by the vegetable oil market, which is supported by the crude oil market. And that is supported by, obviously, the biggest feature of all, and that is the Ukraine war.”

In the end, though, Zuzolo says his company is the most concerned with wheat and energy markets.

“The wheat market is contending with a situation very similar to 2008 in terms of drought potential knocking down the yields and the production, and then, all of a sudden, we have the energy sector here in the United States looking a lot more like 2008. If you throw on top of that the Russia Ukraine issue, then yes, you can have something that lasts for quite some time, and it could be years, even, depending on how much this dismantles globalization. I think that’s a real possibility.”


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