As swords rattle on Ukraine’s border with Russia, it seems like a good time to examine a little of why Russia might invade and what it might mean to global grain markets.
New York Times writers Dan Bilefsky and Richard Perez-Pena Tuesday delivered a good account of why Russia seems intent to invade Ukraine. The only thing they leave out is Russia’s abiding paranoia about invasion from the West after World War II and its massive casualties.
After the collapse of the Soviet Union, the ring of countries protecting Russia from Western countries and NATO melted away, becoming independent states, the article said. Many have since joined NATO with Ukraine being an exception.
NATO was formed to counter the Soviets, and with former Soviet Union countries joining NATO, Russia feels more vulnerable to the predatory West. And, since the Soviet Union dissolved, Putin and others feel Russia has been robbed of its rightful place among the world’s great superpowers, the Times said.
What is not clear is whether Putin would be satisfied with a Ukraine that is independent from Russia yet not a part of NATO, they said.
The US was thought unlikely to send troops directly into Ukraine to fight the Russians since Ukraine is not part of NATO, the Times article said. Arms could be sent, however.
US President Joe Biden has warned Putin of severe economic sanctions should Russia invade, including a cut from the World Bank. But “Europe has important trade ties with Russia, including a need to Russia’s natural gas, something Putin has exploited before.
GRAIN MARKETS NERVOUS
Keith Good, of the Illinois Farm Policy News, said Tuesday that the USDA’s Economic Research Service had explained that “over the last 15 years, area planted for corn in Ukraine has tripled while corn yields have roughly doubled. Corn production has increased six-fold and is projected to reach 42 million tons in the current year, though still only 3.5% of global corn output.
“Despite having a small share of global corn output, Ukraine is forecast to account for about 17% of global corn exports (on an October-September trade year basis),” the ERS said. “Higher corn production has not been matched by rising domestic consumption, as the Ukrainian population is decreasing and livestock development is stalling, making Ukraine and exceptionally export-oriented country.
“Since about 10 years ago, when the country’s corn production and exports soared, Ukraine has become one of the four major world exporters of corn, on par with Brazil and Argentina.”
That makes it a big deal, an analyst said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $140.55 to $141.46 per cwt, compared with last week’s range of $139.02 to $141.83. FOB dressed steers and heifers went for $220.57 to $221.31 per cwt, versus $216.43 to $220.53.
The USDA choice cutout Tuesday was down $3.59 per cwt at $270.37, while select was off $0.93 at $267.82. The choice/select spread narrowed to $2.55 from $5.21 with 111 loads of fabricated product and 54 loads of trimmings and grinds sold into the spot market.
The USDA reported that basis bids for corn from feeders in the Southern Plains were unchanged at $1.20 to $1.30 a bushel over the Mar futures and for southwest Kansas were unchanged at $0.20 over Mar, which settled at $6.38 a bushel, down $0.17 ¾.
Eight heifer contracts were retendered for delivery against Feb on Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was $162.71 per cwt down $0.45. This compares with Tuesday’s Mar contract settlement of $168.72 per cwt, up $1.85.