I'm not so sure a doddering old man who's likely to ramble off talking about the blonde hair on his legs exactly strikes fear into Putin's heart either, but whatever...
From this week's (today's) Pro Farmer. Some perspective as it pertains to the commodity markets among other things. Wiesmeyer is a sharp cookie who's been around a long time.
Russia/Ukraine: War of words turns into actual war
By Editor Brian Grete and Washington Policy Analyst Jim Wiesemeyer
Russian President Vladimir Putin on Feb. 21 recognized
two self-proclaimed separatist republics in
eastern Ukraine and signed aid and cooperation pacts
with separatist leaders. Russia then started a full-fledged
attack on Ukraine Feb. 24. On Feb. 25, Russia agreed to
meet with Ukrainian officials in Minsk.
Putin wants to reclaim the former Soviet UnionA key in the situation is Russian troops going beyond
the Donbas region and moving further into Ukraine. In a
passionate address to his country on Feb. 21, Putin said he
longed for a return of the Soviet Union, suggesting he
intends to take over all of Ukraine and then set his sights
on other former Soviet republics.
U.S., ally nations sanction RussiaThe U.S. and Europe quickly saw the first tranche of economic
sanctions on Russia did not halt Putin’s aggression.
More sanctions were announced Feb. 14 and President Joe
Biden spoke to the nation in a televised address. The coordinated
punishments include sanctions on Russia’s most
prominent financial institutions and some Russian oligarchs,
along with cutting off Russian sovereign debt
abroad, which means it can no longer raise money from the
West and trade in U.S. or European markets.
Japan, Taiwan and Singapore jointly said they would
limit technology exports to Russia to pressure Putin with
damaging restrictions on his ambitions to compete in
high-tech industries.
Scope, impact of U.S. sanctions questionedThe U.S. sanctions were limited in scope and fell short of
the more sweeping economic warfare that some, including
members of Congress and other supporters of Ukraine,
have repeatedly demanded in recent weeks.
Putin insulated Russia’s economy against anticipated
sanctions and established deeper economic ties with China.
Many analysts wonder whether even the most serious of
financial sanctions will be enough to dissuade Putin from
trying to reconquer most of the former Soviet Union.
Market impacts... what has and could happenEquity markets around the world plunged on Russia’s
war expansion. Many ag markets saw sizeable gains
before and after the Russian assault.
The recent past suggests the conflict will be short-term
explosive for wheat and corn. In 2014 when Russia
annexed Crimea from Ukraine, the incursion lasted nearly
a month in which time front-month SRW wheat futures
rallied 13.9% and corn strengthened 10.6%. But the rallies
were based more on fear than anything, as there was little
actual impact to shipments from Black Sea ports.
This time, Putin appears to want to close Ukraine’s
ports. That would more greatly impact global grain trade
than it did in 2014.
Combined, Russia and Ukraine account for nearly 30%
of global wheat exports and almost one-fifth of world
corn exports. Ukraine is the world’s largest producer and
exporter of sunflower seeds and sunflower oil. When
combined with Russia, the two countries account for
nearly 80% of global sunseed oil exports. They also
account for nearly one-third of the world’s barley exports.
Other commodities likely to be impactedRussia is a major global energy producer, accounting for
more than 9% of global crude oil output and 17% of natural
gas production. As a result, Europe oil prices surged
just over 40% following the Russian invasion. Germany
suspended the Nord Stream 2 pipeline, a 1,230 kilometer
(764 mile) natural gas passage under the Baltic Sea, running
from Russia to Germany’s Baltic coast. Germany’s
economy minister says the country has a secure supply of
gas, though this will cause price impacts at a time when
energy prices are already elevated.
Other commodities impacted include palladium (Russia
accounts for more than 40% of global production), aluminum
(6%), copper (3.5%) and cobalt (4%).
Key market impacts and outlook• If Brent oil rallies near $120 a gallon (spiked $100 last
week before retreating), a world recession would be more
likely, including impacts for the United States.
• Economists says every $10 increase in oil above $80
would equate to 0.1-point drop in U.S. GDP.
• Russian stocks have lost more than one-third of value.
• The Russian ruble is at a record low vs. the U.S. dollar.
• Russia is more dependent on European cash than
Europe is on Russian gas. That will be key ahead.
• In an ironic development, U.S. oil and LNG will have to
aid Europe’s current energy policy woes.
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