ASNA Edge Special Report: 2/25/22
An ASNA Edge Special Report: Making Sense of Ukraine, China, and the U.S. Ag Market
With headlines out of Russia and China dominating television and the internet, the marketing experts on the ASNA Edge team have released their own special report on current events: one which will help AgriSompo North America agents and policyholders understand the ways in which recent news, particularly that centered around the Russian invasion of Ukraine, will affect the agricultural commodity markets.
We know that the headlines of the past few days have provoked confusion and uncertainty throughout the world. We hope that by providing some key information and an indication as to how the situation might proceed, we can help to increase the clarity and soothe the anxiety with which you monitor the agricultural markets over the coming weeks.
You may watch the special report below. If you have any questions or concerns, please feel free to reach out to the ASNA Edge team at MarketingInfo@sompo-intl.com.
How Has the Situation in Ukraine Affected Commodity Prices?
U.S. wheat and corn prices rose by their daily trading limit after the news broke that Russia had invaded Ukraine; U.S. soybeans rose sharply as well. However, much volatility should be expected in the short term.
The recent USDA Outlook Report and the end of the month—as March corn, wheat, and soybeans approach delivery—have added to the market’s general nervousness surrounding recent events.
As the situation in Ukraine develops, one question on many people’s minds is whether the infrastructure required to transport commodities out of Ukraine will be affected by the fighting. While port activity has obviously been hampered, ASNA Edge’s Sterling Smith believes that Russia will largely seek to avoid damaging this infrastructure.
Among other effects, there has been a powerful rallying in the vegetable oil space globally. Ukraine is the world’s largest exporter of sunflower oil, and a disruption in their supply will be beneficial for soybean oil and especially canola oil.
Where Does News from China Fit In?
While most of the top stories of the week have centered on Ukraine and Russia, China has also been in the news, and is in a position to influence commodity markets.
Yesterday, a Chinese defense minister made a comment regarding Taiwan. While China’s stance on the Russia conflict is somewhat unclear, it is possible that the two countries will cooperate more closely as sanctions make it difficult for Russia to do business with the West.
ASNA Edge's Brooks York recommends keeping a close eye on headlines out of China, as they may have a profound and lasting effect on U.S. exports over the next several years.
How Can I Learn More?
The effect any single news event has on agricultural markets can be difficult to unravel. Often, it is not only a single event, such as the invasion of Ukraine, which has an influence, but the multiple other secondary and indirect events created in its wake.
As always, the ASNA Edge team is here to help you make sense of these complexities. Use the links on this page to learn more about our team and the services we offer.
In particular, be sure to read the ASNA Edge Daily Market Email which will be released this afternoon, February 25. If you have not signed up to receive the Daily Market Email, please contact us at MarketingInfo@sompo-intl.com.