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Iurii
Contributor

The latests updates from Ukraine

The tragedy with the Malaysian Airlines Boeing-777 over the South-East Ukraine will inevitably cause serious impact on the Ag markets.

With the 99.9 percent probability it is commonly accepted that the aircraft had been shot down by the terrorists supported and equipped by Russia. While the USA has already recently introduced further sanctions on Russia the EU is now being pushed forward to do the same.

In case the next stage of sanctions will be implemented Russia may face serious problems with its grain export for several reasons.

First, on Friday the Ukrainian Prime minister Arseniy Yatsenyuk called Ukrainian business to be ready to the complete break of the trade between Ukraine and Russia. Considering that in the peak season Russia uses Ukrainian ports for its exports this may cause logistic problems to Russian exporters because the capacities of the Russian ports on the Black sea are unable to handle all volumes of commodities timely.

Second, sanctions may have serious impact for the Russian financial system that will be unable to adequately serve the export-import transactions.

Third, sanctions will impede the Russian export that as the consequence will increase the transaction costs and make the Russian commodities less competitive.

Though the tragedy with the MH17 flight does not impact directly the Ukrainian agriculture still the war in the South East Ukraine take its toll. It is very likely that there will be no harvest on the Ukrainian territories controlled by terrorists. Big field areas are mined; on some territories are active military operations while on other fields terrorists set fires to destroy crops. Also terrorists threaten to kill any machinery operator who will venture to harvest.

The American company Cargill claims that its oil crushing plant in Donetsk had been grabbed by terrorists on July, 4th. Since then the plant remains idle.

It is unclear how successful will be the planting season this fall. The Ukrainian banks now are short of cash because their clients withdrew actually half of their deposits. The Ukrainian central bank has the limited ability to refinance banks.

Ukraine faces the serious economic crisis.

 

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6 Replies
ECIN
Senior Advisor

Re: The latests updates from Ukraine

Thanks Lurii - I seen some of the pictures of the dwon jet the other day - appears it came down in a wheat field that was ready to cut -- or should have been cut - Now I know why its not and it's not about a weather delay .

 

Be safe over there !

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sw363535
Honored Advisor

Re: The latests updates from Ukraine

Thanks Luril,     Appreciate your input.

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Palouser
Senior Advisor

More on the possible future of the war.

You have answered some concerns I was raising about continuing trade of Russian grain through Ukraine ports under the pressure of war.

 

Here is an opinion of ex military from a journal inside Russia regarding the future of the ground war in Ukraine. Very insightful. And a surprisingly independent point of view - especially at the conclusion.

 

http://www.bbc.com/news/world-europe-28209170

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giolucas
Veteran Advisor

Re: The latests updates from Ukraine

Luri,
Great insight, thanks and wish you and your family the best.
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elcheapo
Veteran Advisor

Re: The latests updates from Ukraine

I was set a bit uneasy today. I was eating
my dinner today about 3 pm, in the out
in the middle of nowhere. The crappy wheat
Field and all. I herd a noise. I thought
someone coming down the road....nope.
it got louder and louder..,.boom boom boom
Boom.,...and it was loud. I looked to
The west, and saw 4 huge military helicopters.

I thought this was surreal, because I was
Thinking about Ukraine.

How the farmers there may see and hear
This all the time.

It sent a chill down my spine

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marketeye
Veteran Advisor

Re: The latests updates from Ukraine

Iurii,

 

Excellent perspective. It really does seem like the world is now glaring at Russia, and specifically Putin. From this side of the globe, it's hard for us to understand all of the dynamics of this tragedy. The human loss and the pain and suffering that goes along with it is heartbreaking. I'll continue to say a prayer for your country's safety and the families suffering from the loss of their loved ones.

I appreciate you taking time to update us on the ag-impacts of this latest event. You offer a unique perspective based not just on your location, but your veteran knowledge of the relationship Ukraine has had with Russia, over the years. The "inside baseball" dope on this situation and how it all will shake out in the grain trade can be better seen by you than most, and the people you talk to as an ag economist.

Others have expressed it already. But, let me say thanks for your contributions, so far. Anytime you can check in, we all are waiting to see what you have to write.

 

Thanks,

 

Mike

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