One of the most pernicious consequences – if primarily for the anti-Russia west – resulting from the Ukraine war, has been the unprecedented spike in fertilizer prices which among other things, has sparked a historic surge in food prices and collapse in supply chains around the globe, as we discussed in these articles published over the past few months:
- Fertilizer Prices Hit Record Highs, May Pressure Food Inflation Even Higher
- “Fertilizer Is Out Of Control” – US Farmers Ditch Corn For Soy To Save On Costs
- Poop-Boom: Manure Supplies Tighten As Fertilizer Prices Soar
- World’s Largest Fertilizer Company Warns Crop Nutrient Disruptions Through 2023
Fast forwarding to today, when we have some good, some bad and some pretty terrible news. The good news it that fertilizer prices have eased modestly from all time highs, as the following chart of Tampa Ammonia CFR spot prices shows.
The bad news is that the the price hasn’t dropped nearly enough: according to Bloomberg, the glut of fertilizers piling up at the biggest Brazilian ports signals that the price of the nutrients has to drop further before farmers start buying.
In Paranagua, private warehouses reached their maximum storage capacity of 3.5 million tons, Luiz Teixeira da Silva, Paranagua’s operations director told Bloomberg. A terminal operated by VLI Logistics, one of the two at Santos port that store fertilizers, is also full, according to people with knowledge of the matter who asked not to be named as the information isn’t public.
As noted above, the price of fertilizers across the globe has exploded to unprecedented levels, and Brazil has been no exception.
That’s a problem because the agriculture-heavy country and food-source for half the globe, imports nearly 85% of its fertilizer and Russia is the main origin. As supplies have normalized, prices have declined over the past weeks, but farmers still aren’t buying. They are waiting for further price cuts, according to Marina Cavalcante, an analyst at Bloomberg’s Green Markets.
“Farmers have the expectation that prices will keep falling after declines last week and in the previous one,” she said. “So they’ll wait for further decreases to buy.”
And here is an example in supply/demand game theory: Brazil is the world’s biggest shipper of several crops, including soybeans. Farmers can delay their purchases until the eve of the soybean seeding in September. But if they all wait too long, a last-minute rush could lead to inland transportation bottlenecks that may leave some of them empty-handed anyway.
There is another problem: there just may not be enough actual fertilizer coming out of Russia, which has decided to punish the world by sending food prices for western nations to record highs and spark social unrest in the process. After all, the biggest reason prices are so high is because there is just not enough supply. And while speculators may have pushed prices somewhat higher than they should be, any farmers hoping that prices will fully renormalize will be disappointed.
Which leaves us with “demand destruction”, only as Rabobank’s Michael Every reminds us, when it comes to food “demand destruction” – especially at poor, third world countries – it has a different, less pleasant name: starvation.
Consider what is going on in Chad: as DW reports, Africa’s fifth-largest country declared a food emergency due to a lack of grain supplies. The landlocked African nation on Thursday urged the international community to help its population cope with rising food insecurity.
Cereal prices across Africa surged because of the slump in exports from Ukraine — a consequence of the war in Ukraine and a raft of international sanctions on Russia which have disrupted supplies of fertilizer, wheat and other commodities from both Russia and Ukraine.
DW spoke with one couple in Chad who are dealing with the effects of collapsing food supplies:
Cedric Toralta and Anne Non-Assoum live in the Boutalbagar neighborhood of Chad’s capital, N’Djamena. Non-Assoum — who had just returned from the market — expressed her dissatisfaction with rising food prices.
”Look what I bought: Here is meat for 1,500 CFA francs ($2.45, €2.28), rice for 1,000 and spices for 600 — that’s more than 3,000 CFA francs only for lunch for four people,” she said.
She told DW that in the past, the same purchase would have cost around 2,000 CFA francs. “My husband and I spent 60,000 CFA a month on food, but now, even 90,000 is not enough!”
The dire situation has forced Toralta to take drastic nutrition measures that are not without consequences.
“We can’t make ends meet, even though I decided to increase our food ration by 30,000 CFA francs. So I’m forced to reduce the amount we eat every day — and you see it’s affecting the children,” Toralta told DW.
”We need urgent food aid for the population,” Non-Assoum said, stressing the urgency. “If even the middle-income population in the capital can’t cope with this situation, how can the rural population? It’s very complicated, and we need the international community to help us.”
The prices of basic necessities have also risen significantly in Chad’s neighbor to the northwest, Niger. Milk, sugar, oil and flour are the products whose prices have skyrocketed there. The cost of fertilizer has also increased dramatically.
At a recent meeting with Russian President Vladimir Putin, the African Union chairperson, Macky Sall, said the continent was bearing the brunt of the war in Ukraine due to a shortage of grain and fertilizer.
As a report from the ground (not from a well-fed Western journalist working from home) puts it: “In the village of Falke, some 665km (413 miles) from the capital Niamey, Tassiou Adamou, a farmer, told DW that this year’s harvest will likely be poor because producers cannot afford to buy enough fertilizer.
“Groundnuts, which are our main cash crop, need fertilizer,” Adamou pointed out. “Until last season, a bag of fertilizer cost 17,000 CFA francs. This year, it has reached 30,000,” he said, adding that it is impossible to produce much for those in the countryside.
“If you used to use three bags of fertilizer for your field, today, you can only have one bag with the same amount. Where you used to harvest 50 bunches of millet, you can barely produce 30 bunches without fertilizer.”
Much of Africa, Every writes, is in the same boat… and it is rapidly sinking, and the irony is that everyone needs much more fertilizer now to avoid a global food crisis, yet they either can’t afford it, or are hoping it falls some more in price. Unfortunately, that will not happen and instead marginal buyers will keep pushing the scarce commodity.
What happens next? We give the mic to Every, who summarized the current debacle best: “the global rich, who set rates, have to decide if they will sacrifice their asset prices to help the global poor eat. If we won’t say that, can we at least say that we have a choice between putting calories in rich people’s cars or in poor people’s mouths?”
To conclude, markets say “demand destruction”, but won’t say it can mean “mass starvation”. Some are now able to say “stagflation”, but many in markets weren’t allowed to until recently. Some can say “recession”, but many in markets and politics still aren’t allowed to. Yet nobody wants to say “depression” because there is *still* the assumption that, bad as things are, somehow a ‘hockey-stick’ bounce lies on the other side. Not sticks, stones, burning torches, and pitchforks.
Here, some may argue that “torches and pitchforks” is a euphemism, but put several hundred million people on food “demand destruction” for a few weeks, and watch as the next Arab Spring won’t be “Arab” and won’t be in the spring: it will be a Global Summer of starvation.
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If countries cannot feed their people from their own sources, then starvation is the natural consequence. Relying on other nations for food, or for the means of producing food, is unbelievably stupid. Nations should have no more people than they can support independently. It really is that simple. The US and Oz are in a good position, but the US might want to curtail its population growth.
Does this apply to australia as well?
It certainly does. What part of Australia being in a good position didn’t you understand?
Nature does work when we let it.
I’ll read ZH articles again if and when the Tylers achieve competency writing in English.
Summer and starvation. Those are two words you rarely see together.
Imagine if the majority of a population were actually involved in their own feeding rather than dependency on the largesse of the political class.
They want to corral people into the city to live in a card deck to make them evermore dependent on Big G to provide the daily sustenance and needs. Starvation works to get people in line. If the people knew how much the Government spends to prevent agriculture they would most likely rebel. That why starvation is coming for most. Willful ignorance.
Like I’ve said before: The only way the sticks, stones and pitchforks reach the ‘ruling class’ folks who are responsible for this is if it’s an inside job. Their Praetorian Guard has to turn on them first, which is rare because of the material benefits that come from being loyal to those who sign your paycheck and enable your lifestyle… especially when the rest of the world starts looking like the emaciated Ethiopian kid with flies all over him.
Nothing to see here….
Freeport LNG plant blast adds to strain on global supplies
HOUSTON, June 9 (Reuters) – Freeport LNG, operator of one of the largest U.S. export plants producing liquefied natural gas (LNG), will shut for at least three weeks following an explosion at its Texas Gulf Coast facility, raising the risk of shortages especially in Europe.
Freeport LNG, which provides around 20% of U.S. LNG processing, disclosed the shutdown late on Wednesday after appraising damage to the massive facility…
DESTINATION EUROPE
The Freeport plant can process up to 2.1 billion cubic feet of natural gas per day (bcfd), and at full capacity can export 15 million tonnes per annum (MTPA) of the liquid gas. U.S. LNG exports hit a record 9.7 bcfd last year, according to the U.S. Energy Information Administration (EIA).
Analysts at data intelligence firm ICIS said in a tweet that 68% of Freeport LNG exports in the last three months went to the European Union and Britain.
https://www.reuters.com/business/energy/explosion-hits-freeport-lng-plant-us-natgas-prices-plunge-2022-06-08/
Wall St. age old Pump and Dump to fleece the Sheeples reviewed.
This is how the really big boys play the game of Pump & Dump.
“…Russia, which has decided to punish the world by sending food prices for western nations to record highs and spark social unrest in the process. ”
That’s rich. The world decided to punish itself, led by the corruptocrats in DC.
Saying that prices on fertilizer haven’t fallen enough and that farmers are waiting to buy doesn’t seem like a viable conclusion. The time for planting in most areas is over. Farmers are not going to wait another month to plant a crop that will not be harvestable by Fall. Many in the US are likely just taking the insurance payout on not being able to plant, which further reduces the amount of food which will be grown.
Duke, the article was mainly referring to Brazilian farmers. They’re waiting to plant this fall in the southern Hemisphere. Yes, its too late here in Norte Americana.
I am torn.
Reducing the population of the Global South = good for us.
The fact that the globalists have planned this and are winning = not so good.
GW, the globalist will also arrange for American harvests to go to the starving shiitholes thereby handing the bill and lots of hunger to lower and middle class Americans.
The planet has too many people. Africa, the subcontinent, and Global South are all overpopulated. It will end badly.