Ukraine Safe-Passage Grain-Talks Fail, Expect Still Higher Food Prices Globally

Authored by Mike Shedlock via MishTalk.com,

Talks between Turkey and Russia aimed at providing safe passage for Ukraine’s harvest ended in failure…

Wheat futures courtesy of Trading Economics

Talks End in Failure

Turkey attempted to mediate safe passage in the Black Sea for Ukraine’s grain harvest, but objected to the Black Sea proposal in a statement on Tuesday before the talks in Turkey.

A significant portion of the world’s food supply is on the line, but Ukraine Nixes a Potential Deal. 

“We cannot rule out Russia’s plans to use such a corridor to attack Odessa and southern Ukraine. That is why effective security guarantees are needed to restore shipping,” the Ukrainian Foreign Ministry said.

The stakes of a possible deal are enormous, with a significant portion of the world’s food supply on the line. Russia’s invasion left around 20 million metric tons of grain and seeds stranded in Ukrainian territory seized by Russia or cut off from the Black Sea ports through which it is normally exported. Russia’s bombing of roads, bridges and other infrastructure, along with a blockade of Ukraine’s ports, have added to the obstacles to getting grain out of the country, Ukrainian officials and farmers say.

“We emphasize that decisions must be made with the participation of all parties involved. We will reject any agreements that do not take into account the interests of Ukraine,” the Ukrainian Foreign Ministry said Tuesday.

No Alternate Routes 

BREAKING: Putin suggests the EU drop sanctions on Belarus so they can import Ukrainian wheat through the extensive border with Poland

— Jack Posobiec 🇺🇸 (@JackPosobiec) June 3, 2022

Ukraine objected to an alternative plan to ship the grain through Belarus, because it has been a Russian ally in the invasion.

And the EU sanctions Belarus. 

Lack of Grain Exports Driving Global Hunger to Famine Levels

The UN reports Lack of Grain Exports Driving Global Hunger to Famine Levels

David Beasley, Executive Director of the World Food Programme stated: “When a nation that is the breadbasket of the world becomes a nation with the longest bread line of the world, we know we have a problem.” 

With Ukraine and the Russian Federation together exporting 30 per cent of the cereals and 67 per cent of sunflower oil in the world, he underscored that “what happens to one affects us all”.  

The lack of fertilizer and record‑low inventories in cooking oils and grains have already started to unravel decades of global economic progress, she said. While the Russian Federation and Ukraine used to provide nearly a third of the world’s wheat exports and are top‑five global exporters of corn, she noted all Ukrainian ports remain closed. The international community must coordinate a global response and eschew a “to each their own mentality”, she emphasized.

Antony J. Blinken, Secretary of State of the United States, recalling WFP and FAO estimates that people affected by food insecurity due to conflict would increase to an estimated 161 million in 2022, noted that the Russian Federation’s war in Ukraine could add another 40 million people to that total.

Blockages 

The blocking of grain exports from Ukraine endangers the lives of millions of people. I make a heartfelt appeal that every effort be made to guarantee the universal human right to food. Please do not use wheat, a staple food, as a weapon of war!

— Pope Francis (@Pontifex) June 1, 2022

Who’s blocking, Russia or Ukraine? 

Egypt in Dire Need

In dire need of wheat, Egypt seeks $500 million from World Bank for its food program, to buy 5 lakh tonnes from Indiahttps://t.co/SmejdaxJAe

— OpIndia.com (@OpIndia_com) June 8, 2022

US Wheat Prospects Grim

According to @USDA_NASS, for the week ending June 6, 2022, topsoil supplies rated 16% very short, 20% short, 46% adequate and 18% surplus. Subsoil moisture supplies rated 20% very short, 22% short and 47% adequate, and 11% surplus. #wheatharvest22 pic.twitter.com/UgZhU3MRCW

— KansasWheat (@KansasWheat) June 7, 2022

Brutal US Conditions

TRANSCRIPT: This Year’s American Wheat Plantings Are Brutal https://t.co/BWsclvkybi

— Edward Harrison (@edwardnh) June 8, 2022

A Modest Proposal

Correct me if I’m wrong:

1. Wheat shortages might cause starvation in poor countries.

2. Rich countries eat too much bread, making them fat and unhealthy.

I think I see a way to solve two problems at once. What am I missing?

— Scott Adams (@ScottAdamsSays) May 31, 2022

Food Shortages From Excessive Intervention

Food Shortages May Come From Excessive Intervention https://t.co/snViSJKSvQ via @hedgeye

— Daniel Lacalle (@dlacalle_IA) June 7, 2022

What About Corn?

81% of North Dakota’s #corn was planted as of June 5, still the slowest pace on record. Final planting date for full crop insurance eligibility was May 25 for most of the state. Planting corn too late in ND is risky because of the chances of early frost. pic.twitter.com/rqDuetArg8

— Karen Braun (@kannbwx) June 6, 2022

Expect Higher Prices 

With exports down, plantings down, and fertilizer costs soaring, expect higher food prices at the grocery store this summer.

Restaurants Add Temporary Fees to Your Food Bill to Offset Macroeconomic Pressure

Meanwhile, please note Restaurants Add Temporary Fees to Your Food Bill to Offset Macroeconomic Pressure

Fee Examples

• Romano’s Macaroni Grill added a “temporary $2 fee to offset macroeconomic pressures”.

• Saltie Girl added a “kitchen appreciation fee”

• Ally Restaurants adds a “wellness fee” of 3% and is considering upping that fee to 5%

• Other stores are adding supply chain surcharges, non-cash adjustments, and fuel surcharges.

What About Verizon?

Don’t forget Verizon’s $2.20 Economic Adjustment Charge on its wireless plans.

Rent, Food, Energy

Rent, food, and energy make up 52.7% of the CPI. Other than crush demand for oil, the Fed cannot do anything about them.

Q: How Far Behind the Curve is the BLS and Fed on Rent Inflation?

A: Very. See the link for details.

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