Russian Invasion of Ukraine May Impact Nearly a Quarter of World’s Grain Production
April 6, 2022
The average estimates for today’s DOE inventory update from the Bloomberg survey is for crude oil stocks to be down 2.183 million barrels, gasoline down 202,000 and distillates down 598,000.
The API inventory report release yesterday late afternoon had called crude oil stocks up 1.1 million barrels. The crude oil inventories at Cushing were up 1.8 million barrels. Gasoline inventories were down 543,000 barrels and distillates were up 593,000 barrels.
The market was lower in yesterday’s trading on the news of the lockdown of Shanghai, the dollar index rallying up to a 22-month high. Prices remain supported as the reports are that more sanctions are being put on Russia after it is being accused of war crimes. The US, the EU and the Group of Seven nations said they will ban all new investment in Russia, increase sanctions on financial institutions and state-owned enterprises there and penalizes unidentified Russian officials and their family members.
The US Treasure said it was halting dollar debt payments from the nation’s accounts at US banks. The EU said they are proposing a ban on Russian coal. German is even considering this option which previously they had not as they get the vast majority of their energy needs from Russia.
There is starting to be more stories about the coming food crisis that the war in Ukraine is impacting greatly. Bloomberg reports that almost one-quarter of the world’s grain comes from Russia and Ukraine. They said that in Ukraine there is 15 million tons of corn from the fall harvest that is stuck and is historically getting to market right now.
The market has been saying that Russian crude has had an excessively big discount helping it continue to be sold into the global market with China and India being the main buyers. Reports this morning indicate that China’s purchases have slowed. There are a couple of potential reasons. One, Shanghai is on lockdown, so demand is depressed. Two, it might be getting harder for everyone to buy Russian crude and if that is the case then the global supply tightness will be getting worse, and prices will remain supported.