Russia’s announced ban on fruit, vegetables, meat, fish, milk and dairy products from nations imposing sanctions on Moscow for its support of pro-Russian rebels in Crimea and eastern Ukraine will harm the economies of affected nations, most notably Europe, but leaders say it’s worth the price.
After tightening the sanctions screws a little more after MH17 was shot down, British Foreign Secretary Philip Hammond was quoted by NBC News saying, “If we are going to take a stand against Russian aggression, if we are going to insist on Russia behaving like a civilized nation in the modern world, then we have to be prepared to pay the price for doing that.”
This tit-for-tat trade action could hurt Europe and Russia the most where East and west are bound together by oil and natural gas. The European union is Russia’s largest trading partner, buying $277 billion worth of products and commodities in 2013, including $156 billion of crude. This connection makes both vulnerable to an all-out trade war.
The US Census Bureau shows total 2013 exports to Russia at $11.137 billion with imports worth $27.086 billion. So far in 2014, the US has exported $5.933 billion worth of goods while importing $12.771 billion.
The US Meat Export Federation lists US beef and variety meat exports to Russia at only 178 tonnes through May with a value of $585,000. Total volume is down 91% from 1.937 million tonnes in the same period a year ago, and the value is down 78% from $2.649 million.
Total pork exports to Russia so far this year amount to 9,882 tonnes, down 7% from 10,677 in the year-ago period. Pork exports this year were worth $33.016 million, up 7% from last year’s $30.858 million.
In 2013, the US exported about 267,000 tonnes of chicken to Russia, valued at $303 million, about 7% of total US poultry export volume, down from about 40% of exports in the mid-1990s, the National Chicken Council said.
CORN HITS CHART RESISTANCE
Corn pulled back in overnight trading from moving-average resistance in the nearby Sep contract, augmented by rain storms sweeping across the Midwest. The rain improves soil moisture just as the crop is filling the ears after pollination.
The rain also helps soybeans. The crop typically tries to bloom and set pods in August, and it needs moisture at this time.
Wednesday, corn followed wheat higher, even though increasing supplies of feed wheat in the EU from too much rain at harvest are expected to limit EU corn demand in coming months.
However, the trade is nervous about the prospect of increased farmer selling on any rallies as they clean out bins ahead of this year’s harvest. As a result, technical traders appear to be using chart signals as places to adjust positions ahead of Tuesday’s crop reports.
CASH CATTLE MARKETS QUIET
Cash cattle markets remain quiet with asking prices around $164 to $165 per cwt on a live basis, up about $2 from last week. Futures continue to hold a significant discount to last week’s cash market amid active spread trading.
Weekly slaughter, at 340,000 head through Wednesday, is up from 336,000 a week ago but is below the 360,000 of a year ago, so packers are working to take advantage of what the trade thinks are very positive margins.
The USDA’s choice boxed-beef cutout value Wednesday was $261.97 per cwt, down $1.30 while select was down $0.98 at $255.77. The choice/select spread narrowed to $6.20.
The CME Feeder Cattle Index for the seven days ending Tuesday was $224.56 per cwt down $0.59.