Russia Set to Disrupt Ag Markets (Again)

The assessment of the commodities markets in the world was already complex and threatening. The U.S. drought is not showing any signs of breaking up, and it is already clear that wheat harvests will be less than in previous years. The situation is going to get much worse and soon as Russia apparently is preparing to buy more grain from the western states than it has in many years.

The crop in Russia was a disaster, and there are already serious shortages months before the next harvest is due. The assessment of this year’s output is that it will be worse than last year, setting the scene for some notably high crop prices in the very near future.

Unless the spring rains arrive as they have in past years, the United States will be heading into the system with very low soil moisture, meaning corn, wheat and soybeans will be affected. Back in the 1970s, the Soviet Union executed what was referred to as the “Great Grain Robbery,” bringing over 10 million tons of wheat from the U.S., creating a domestic shortage here. That now seems to be the setup for this year unless there is some sizeable rebound in supply. Given the forecast for U.S. farming, such a rebound appears unlikely.

-Armada Corporate Intelligence

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