If you’ve been following the markets these days, you’ll have seen strikes within the wheat markets prior to now couple of days, pushed by geopolitics. But what’s occurring with soybeans?
As Russia begins to make strikes into components of Ukraine, and wheat costs rise, Neil Townsend, chief market analyst with FarmLink advertising options, joins RealAg Radio host Shaun Haney to debate the impacts.
Strictly from a advertising perspective, one of many questions that comes up with a few of the present costs we’re seeing is whether or not or not we promote the excessive.
The key, says Townsend, is acknowledging that we don’t know what the precise final result goes to be.
“We don’t know how aggressive Putin is going to be beyond what he’s already done. There’s a lot of uncertainty and volatility,” he explains. “I do think you need to risk off when you see a bounce in prices for this, because the one potential out comes is that this is it, this is what he’s done, and he’s going to sort of stop there for awhile.” (Story continues beneath audio.)
The second final result is in fact if issues get additional headed, and Russia really invades. Which as Townsend explains, would imply you bought too early, nevertheless it’s laborious to hedge your bets on that.
“We can’t lose sight of the absolute importance of Ukraine and Russia in the world wheat trade matrix, the export matrix. they are essential, you absolutely have to have it, and it would be critical if something happened where 25 per cent of the exports couldn’t get through because of hostilities. That would be devastating to a lot of countries and would entail a major shift in business to the European Union, and especially to North America,” Townsend says.
There are comparisons available in the market we are able to have a look at from the Russia and Crimea state of affairs of 2014, the place the ultimate commerce was up about $2, nonetheless, as Townsend speculates, that state of affairs was materially totally different.
“I think that one caught people a little bit more by surprise. I also think that the strategic outcome, or the strategic ask that Russia had was more limited. They wanted Crimea, they got Crimea, under the pretense of like, all the people want it to be a part of Russia,” he explains. “It’s a difficult one. It really is.”
“It seems out of step with being in the world in 2022. But then when you start to think about it, and you look at all of the sort of dominoes around the world, it’s not that out of step.”