The new geopolitical scenario generated by the Russian-Ukrainian conflict generated a change in price relations that particularly affects cereals.
The British consultant CRU, specialized in commodities, has just published the graph that measures the relative evolution of the prices of different basic raw materials, which shows that the price of a basket of fertilizers -adjusted to January 2020 values- is far removed from the price level of the main grains.
Although in the last stretch of 2021 a similar phenomenon had been registered due to the rise in energy commodities, since the beginning of 2022 that relationship had begun to settle down, until the invasion of Ukraine by Russia blew the the prices of energy raw materials and also of fertilizers are blown again.
The point is that, with the extension of the conflict in the Black Sea, it seems unlikely that the problem can be resolved immediately and that is already affecting planting decisions for the next agricultural campaign, where producers, faced with the excessive growth of costs, they choose to reduce cereal area because they are crops that are very demanding of fertilizers.
First consequence of the frenetic rise in the value of fertilizers: The intention to plant corn in the US fell.
In Brazil, a nation that imports most of its fertilizers, the problem became a central part of the federal government, which launched a national program aimed at making the use of this critical agro-input more efficient in order to sustain agricultural yields.
In Argentina, the problem is doubly serious because, as agro-inputs get closer and closer to the real price of the dollar, the prices of grains in the domestic market move further and further away from the official exchange rate – intervened by the government– due to the establishment of an export quota and the creation of “disguised withholdings” aimed at financing various trusts.
The problem, far from tending to be solved, could potentially worsen if one takes into account that this week the Minister of the Economy, Martín Guzmán, said in a television interview on channel C5N that they are designing new tools to capture “unexpected profits” generated by the Russian-Ukrainian conflict, which clearly shows that new extractive mechanisms are being planned for the agricultural sector.
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