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RUSSIA TERMINATES Black Sea Grain Deal. Food Prices & Inflation RISE & GLOBAL FOOD CRISIS Deepens

Nov 01, 2022

RUSSIA TERMINATES Black Sea Grain Deal. Food Prices & Inflation RISE & GLOBAL FOOD CRISIS Deepens

Hi, welcome back to Joe's blogs. This video is the next in a series looking at the financial implications of the

Russia

n invasion of Ukraine on the

global

economy. In today's episode, I want to talk about

food

now.

Food

supply and potential shortages is a recurring problem. since the beginning of the war because Ukraine was previously known as the breadbasket of Europe and that is because it is a major producer of wheat, corn and sunflower seeds, so the loss of those potential crops meant that we were running the risk of a potential

food

crisis

not only in Europe but worldwide because Ukraine exports to a variety of countries and in the first three months of the war we saw the price of all those staple

food

s skyrocket and that pushed up

inflation

around the world. the world and in an effort to address this problem, Turkey got involved and brokered an agreement between Ukraine,

Russia

and the United Nations to allow safe passage and export of Ukrainian croissant operations and in recent months we have started to see

prices

they are back down and while

food

security issues remain a major concern, there was hope that we could restore the balance and avert a major famine

crisis

around the world.
russia terminates black sea grain deal food prices inflation rise global food crisis deepens
However, as a result of recent alleged attacks,

Russia

has now announced that it has withdrawn from the

grain

deal

that was signed in July and that it can no longer guarantee safe passage for any of the Ukrainian crops, so in the video of today we will have a look at exactly what

Russia

has announced. We will talk about the implications of this in the short and medium term. We will see how important Ukraine is. We'll look at some of the crops he's producing. I will see exactly what crops Ukraine is producing, where those crops are grown, and what are the problems here.
russia terminates black sea grain deal food prices inflation rise global food crisis deepens
We will see what is happening regarding

prices

. I will then share with you an update on the

global

food

crisis

report that I reported on a few months ago and then finish today with my summaries on what I believe to be the implications of

Russia

's latest actions for

food

supply, the

food

price

inflation

and the world economy, so before you get started on all that, if you could. ask you to give me a thumbs up at some point during this video if you are enjoying the content. Subscribe if you haven't already. Don't forget I always include chapters so if you don't have time to watch the full video you can select and choose what you would like to watch and if you would like to support the channel take a look below or you will find links to YouTube.
russia terminates black sea grain deal food prices inflation rise global food crisis deepens
Coffee Patreon and Amazon shopping links and once again I would like to thank everyone who has supported the channel. I don't have time to respond to everyone individually, but I do get individual notifications so I can see exactly who it is. supporting the channel and I really appreciate it as I mentioned in the introduction that Ukraine occupies a really important position in the world

food

supply. This graph shows the position Ukraine occupies in terms of export of certain key

food

substances and shows that Ukraine is the largest exporter of sunflower seeds that are important. because they are used to make sunflower oil, which is used as a basic cooking ingredient in many emerging and developing countries, and Ukraine currently supplies about 50 percent of all sunflower seeds exported

global

ly.
russia terminates black sea grain deal food prices inflation rise global food crisis deepens
Ukraine is Bali's second largest exporter. which is the fourth most consumed

food

substance in the world after wheat, rice and corn Ukraine is the third largest exporter of wheat, which is the basic ingredient used to make flour which is then used to produce bread and pasta and noodles and couscous which make up the main dietary status in many emerging developing countries, it is also the third largest exporter of rapeseed or canola w which is also used to make cooking oil and is the fourth largest exporter of maize or maize , which is the third most consumed

food

group in the world after weeds and rice and, since it is gluten-free, is used to make a variety of flatbread products such as tortillas and cornbread and just to put the scale of the problem in perspective, this graph shows the increase in the production of barley, corn and wheat over the course of the last 20 years in Ukraine and this graph shows that Ukraine has focused on the two

Food

substances popular corn and wheat news which, together with rice, account for around 51% of all calories consumed

global

ly each day and over the past 20 years the volume of corn produced in Ukraine has increased from around 4 million tons to 42 million tons, which is more than a 10-fold increase in that 20-year period and wheat grower volume increased from around 10 million tons to over 33 million tons, so a increase of more than three times and The reason I wanted to show this graph is that Ukraine has been increasing its production to feed the export market.
russia terminates black sea grain deal food prices inflation rise global food crisis deepens
This is not because Ukraine's population has expanded exponentially. It is because there is a worldwide demand. Ukraine has very fertile soil and very good growing conditions. for crops like corn and wheat and so it has been expanding its business, but more importantly it has been supplying these critical

grain

s around the world to countries that are desperate for

food

, so it can see in this analysis how important Ukraine has become in the world

food

market. supply chain let's take a look at what is happening specifically in the regions that

Russia

has invaded and are now occupied Ukraine is one of the largest producers and exporters of wheat and in 2021 supplied around nine percent of world wheat exports if we now look at this map and focus our attention on the four key regions to the east of Ukraine these four regions contribute 21 Ukraine wheat production and in 2021 the country produced 33 million tons in total, so the area currently controlled by

Russia

produces seven million tons of wheat and, in terms of export tonnage, that equates to about 40 percent of the total volume of wheat Ukraine exported in 2021 Ukraine is the world's largest exporter of sunflower oil and has a share market share of about 50 percent in 2021 Ukraine produced 19 million tons of sunflower seeds and 19 or 3.6 million tons all were produced in the four areas that are currently occupied by

Russia

military is a

grain

used for livestock is no longer fed worldwide and Ukraine is the second largest exporter in the world produced about 31 million tons in 2021. as you can see on this map the four areas currently occupied by

russia

equals 28 of all the millet produced which equals around 9 million tons Ukraine is the fourth largest exporter of Bali

global

ly and as you can see on the map 17 of all barley production comes directly from

russia

controlled areas rapeseed or canola as it is also called as another very popular vegetable oil in 2021 23 million tons of rapeseed were produced in the country and 12 or around of 3 million tons were produced in areas currently occupied by

Russia

one One of the immediate implications of the

Russia

n invasion of Ukraine was that Ukraine lost access to many of its ports, but also lost control of the

Black

Sea.
russia terminates black sea grain deal food prices inflation rise global food crisis deepens

Russia

sent many warships to the area and it was no longer safe for Ukrainian commercial ships to leave. port and trying to deliver those crops as a result of this, the world

food

market lost the supply of old Ukrainian

grain

s overnight and this caused an increase in

food

prices

, in particular for wheat, corn and sunflower oil, and at that time it was estimated that around 180 million people around the world were at risk of

food

insecurity and potentially famine and the reports that were produced at that time have now been updated and I can give you a figure updated on what the world

food

insecurity numbers are later in this video now the United Nations was very concerned about this situation and Turkey went to great lengths to broker a

deal

between

Russia

, Ukraine and the UN to try to allow these commercial vessels to have a safe passage through the

Black

Sea and to be able to deliver all these

food

substances and on July 22 an agreement was signed between t all parties for 120 days to ensure that all those exports could continue and this was seen as a historic agreement and was the first sign of hope that we can control the world

food

crisis

and since that agreement was signed more than 9 million Tons of

grain

and other

food

substances have left Ukrainian ports and we have seen

prices

begin to drop

global

ly, however

Russia

has now announced that they have exited the

deal

and are no longer prepared to guarantee passage Certain of none of these commercial ships, the

Russia

n Defense Ministry claimed Ukraine an attacked its

Black

Sea Fleet near Sevastopol with 16 drones and British Navy specialists had helped coordinate what it called a terrorist attack

Russia

said it repelled the attack but that the ships attacked were involved in securing the

Grain

Corridor off Ukraine's

Black

Sea ports in response to this Or, Ukraine's foreign minister said that Moscow had used the explosions that took place more than 130 miles away from the

grain

corridor as a false pretext for the long-intentioned move to exit the

grain

deal

as a direct result of the suspension of the agreement.
Ukraine claims that 218 vessels are effectively blocked and cannot navigate to their destination ports in a telegram message, the Ukrainian Ministry stated that since Ukraine does not have permissions from the Joint Scheme Coordination Center to pass through the safe corridor, the 218 vessels are now blocked in their current positions now clearly one of the biggest issues related to

food

supply and the potential subsequent shortfall is the price impact and the price of

food

is really important because it is one of the critical factors in the

global

calculation of

inflation

and as you will know if you have followed the channel one of the problems facing the

global

economy right now is that we have really high

inflation

rates in most countries of the world and the two areas that have been hit hardest as a result of the

Russia

n invasion of Ukraine are

food

prices

and fuel

prices

and the problem What we have with both one of them is that they disproportionately affect the poorest members of all societies because everyone needs to eat and most people need fuel for heating and cooking or for transportation and the price of

food

substances that are Ukraine's main exports, such as wheat, corn and sunflower.
Oil is absolutely critical to the diet of many poor people around the world, as I mentioned earlier, wheat is crushed to make flour and that flower is used to produce pasta, bread and noodles. les and couscous, and that makes up a large part of many people's diets, so let's take a look at what has been happening with the price of all these key

food

substances and where we are now. This chart shows the movement in price. of wheat in the last 12 months and as you can see after the

Russia

n invasion of the Ukraine at the end of February there was a big spike in wheat

prices

but it's really interesting to note that the big spike in

prices

actually came back to go down around the same time that the

grain

deal

with

Russia

was signed so that the world could see that the bottleneck was potentially going to be removed and

prices

began to return to the same level that they had been trading at before the war.
However, if you look at what's been going on since mid-August, when rumors began to circulate that

Russia

might not renew the 120-day

deal

that was due to expire on November 19,

prices

began to

rise

again and if you look at what happened over the course of the last few days you can see we've had a big spike in

prices

so this really shows how sensitive wheat

prices

are to what's going on in the Ukraine right now however this chart of 12 months doesn't really give you a good indication of what's going on with regards to wheat

prices

and why we have such high levels of price

inflation

right now.
If I zoom in on the graph to show the five year period, you can see what the problem is. Over the course of the last two years since we came out of the covid pandemic, the price of wheat has doubled and that is a major problem for many emerging and developing countries. Wheat is used to produce the most basic

food

substances that many people rely on and those people simply do not have the ability to pay twice as much for the flour, bread, pasta, noodles or couscous they need to eat on a daily basis. and so what's been happening over the last couple of years is that those people just can't afford to buyso much wheat, bread or

food

and therefore eat less and that's why we have a growing

global

problem right now with

food

insecurity, the poorest members of society in a lot of countries spend between 50 and 90 percent of all their income is

food

and when

food

doubles in price it means they can buy half this graph shows the movements in corn

prices

in the last 12 months and has exactly the same profile as we just saw for the bad herbs, there was a big increase in the price of corn after the

Russia

n invasion of the Ukraine in late February, that price went back down when the

deal

with

Russia

was signed, however, in recent months we have seen

prices

go up again and in the last few days the

prices

have started to take off and once again if I zoom in on this graph to show the five year period and as you can see in the last two years the price of corn has more than doubled p or what is a actually increased proportionally more than wheat

prices

and that again is a major problem for the same reasons for emerging and developing countries so on the one hand we can talk about

inflation

and why

prices

they are increasing all over the world these movements in corn and wheat

prices

have definitely had a big influence on

inflation

which is causing problems for economies but also causing problems of

food

insecurity and famine in less developed countries and to finish here is the chart for sunflower oil which has a very similar profile there is a dramatic

rise

in price after the invasion which went back down around the time the

deal

was signed and now we are starting to see that

prices

go back up and like the five year view of Sunfire oil

prices

and you can see it has exactly the same profile

prices

have doubled In the last two years in early June I posted a video talking about

global

food

insecurity and I specifically referred to the report that the information security network had produced at the time I made that video, it is estimated that around 180 million of people around the world were facing

food

insecurity so these are people who p potentially went to bed hungry every night and this graph shows an update to the estimated figure and as you can see it is now It forecasts that around 205 million people face

food

insecurity in 45 different countries and that number represents an increase of around 30 million from the end of 2021 and this chart shows the most affected regions and you can see that in East Africa there are around 55 million people affected there are about 52 million people in Eurasia 44 million in central and southern Africa 41 million in Africa Western and almost 13 million in Latin America and the Caribbean everyone look at this graph which shows the countries where the problems are accelerating at the fastest rate and you can see there has been an increase in Nigeria of 6.5 million people who are now at risk

food

insecurity in Somalia another 3.6 million are at risk 2.9 million in Yemen 2 million in Kenya 1.9 million in Sudan 1.8 million in Niger and 1.2 million in Malawi so I wanted to share these numbers with you Because obviously the main focus of this channel is to look at the economy, we look at what's going on with respect to the economy, revenue, revenue and GDP and the potential problems that are now increasing as a result.
The reason for

Russia

canceling this

grain

deal

is that we are going to see higher

food

prices

and that will drive up

inflation

and continue to cause problems around the world, but the problems with regard to

food

supply are not limited to issues financial issues, there are real hunger issues, famine issues, and potential deaths and that's really why I wanted to include the data for this day just to put it in perspective that it's not just about how much money you have in your pocket, but that people are at risk of dying as a result of what is happening in Ukraine, so

Russia

invading Ukraine not only has an impact in terms of the deaths involved in that war, the actual number of deaths from this conflict will be much greater because people wi I will be dying all over the world as a result of not having enough

food

.
What is today's summary and conclusion? Well, I wanted to post this video because I've posted a variety of videos that talk about the

food

crisis

and the impact of rising

food

prices

. about the

global

economy and what we have here today is a combination of both, the fact that

Russia

has withdrawn from the

grain

deal

really raises the question of whether or not these commercial ships will be able to navigate safely through the

Black

Sea over the last day or so it has been reported that the United Nations is still sending these ships so some of the ships are still sailing but there is no longer any guarantee that they will reach their destination ports safely so there is much more. risk there is a lot more uncertainty I don't know what the situation is with regards to the insurance on these boats whether or not it gets lifted this guarantee will invalidate any of those insurances but it will certainly cause a lot more nervousness among the sailors and the people who they really have to navigate through these channels and once again from a

global

markets perspective what we have seen is an immediate increase in the price of wheat, corn and sunflower oil and that will have an impact on the

prices

of

food

around the world, so once again we are seeing volatility in international markets as a direct result of what is happening in Ukraine now that

Russia

has identified recent drone strikes on one of its ships as the reason why I am withdrawing from this agreement, but I think if you take a step back and look at what is happening in general right now,

Russia

is accusing the West in a variety of different fronts.
President Putin recently had a three and a half hour q a in Moscow where he said the West was trying to achieve world dominance and

Russia

is pushing against that and as I said in other videos I think

Russia

is trying to reinvent the Cold War. They are trying to get other countries. they want to join them in a fight against the West and they are really looking to establish new trade alliances because of the financial sanctions they have lost many markets around the world they know they will not be able to export the oil and gas they are moving towards Europe, the US, the UK or Australia so the

global

market is shrinking for

Russia

and it's trying to build new alliances and new trading partners and it's really desperate to develop that relationship with China and India and it's getting here and trying to make the West fit wrong and I assume they will try to develop stronger ties with other nations who also have problems with the West and citing these drone strikes on one of their ships seems like a convenient excuse for

Russia

. blame the West for having to stop all these

food

exports, but the bottom line of this whole situation is that it will definitely drive up the price of

food

and that will keep

inflation

high and that will help

Russia

.
In its political fight against the West,

Russia

is very happy to see

inflation

stay high in all these countries because that will put more political pressure on their leaders to try to bring some kind of resolution to what is happening in Ukraine so that everything get back under control. control, but in the short term we will see an increase in

prices

that will probably lead to an increase in interest rates at a faster rate in many countries because everyone is trying to control

prices

, but unfortunately if

prices

like the price of

food

is being driven by macro events, then raising interest rates in individual countries will not actually have the desired effect, it will not drive the price of

food

back down until supply and demand balance in the

global

economy so we all can What we're going to get is continued higher

prices

, but at the same time we're likely going to see a slowdown in those economies because as interest rates go up, the price of debt goes up. it reduces the amount of free cash that people and businesses have and so spending goes down in that economy and so we see a contraction so when you look at the big picture canceling the

grain

deal

looks like a political move by

Russia

to keep

prices

high to keep

inflation

high to push interest rates up and put more pressure on the world economy and this is likely to accelerate a

global

slowdown and probably lead to most of the world to a recession over the course of the next three to six months, so one of the reasons I wanted to do this video is really to put into perspective how something like

Russia

deciding to cancel their

grain

deal

can have a direct impact on you. and in their household budget because in doing so they raised the price of wheat, corn and sunflower oil. and they are very basic ingredients that go into the price of everything, so the price of a loaf of bread the price of a bag of noodles the price of a bag of pasta will all go as a direct result of this action and that means that the cost of your shopping cart goes up that means you have less cash and therefore has a direct impact on you so once again this is a good example of how the whole world is interconnected and how something that happens in Eastern Europe can affect everyone around the world, so I will keep you posted on any further developments on this topic. he said please give me a thumbs up and don't forget to subscribe if you haven't already
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