DailySA: Wheat prices soar amid conflict – Forward Observer

DailySA: Wheat prices soar amid conflict

Good morning. Here’s your Daily Situational Awareness for Friday, 25 February 2022. You can receive this daily briefing by signing up at https://forwardobserver.com/daily-sa


  • Wheat prices soar amid conflict
  • Conservatives cling to 2020 at CPAC
  • Lobbyists await China bill text
  • China offers Russia alternative to SWIFT
  • Hazards Warning


  • LIC Summary/ INTSUM


WHEAT PRICES SOAR AMID CONFLICT: Wheat futures will be traded with an expanded limit on daily price increases. Due to the invasion of Ukraine, global wheat prices are likely to continue rising. One agriculture analyst said, “Markets face extreme uncertainty after Ukraine suspended commercial shipping at its ports and Russia shuttered ports in the Azov Sea while leaving Black Sea terminals open. Combined, Russia and Ukraine account for nearly 30% of global wheat exports.” (Analyst Comment: Prolonged conflict in Ukraine will impact food prices in the U.S. Expect further increases in grocery items due to lack of global supply. The lack of harvest in Ukraine or Russia may reduce the strain on fertilizer production. – D.M.)

CONSERVATIVES CLING TO 2020 AT CPAC: The annual conservative conference is ongoing in Florida. Politicians and personalities are shaping the campaign messaging, picking winners, and making their case for the midterms and 2024. The Capitol Hill protest and 2020 election remain big talking points for politicians, and “America First” is the recurrent theme throughout the event. (AC: The conference is unlikely to offer any surprise announcements, but the voice and video clips will be used by both sides to push their preferred candidate. Republicans are making a strategic error in focusing on 2020 and subsequent protests, providing progressives the ammunition needed to castigate all non-progressives as “insurrectionists and traitors” to democracy. Events like this are invigorating for the political camps, exacerbating the ongoing low intensity conflict in the U.S. – D.M.)

LOBBYISTS AWAIT CHINA BILL TEXT: The House and Senate formed a conference to complete their “China bills.” Lobbyists warn that sixteen components of the bills will be sticking points with their clients. One issue is a limit on semiconductor grants to “prevent CHIPS funding from being used on stock buybacks or dividend payments.” Another is new sanctions authority and trade secret protections. (AC: This bill is likely to be neutered before it passes. China’s direct involvement in lobbying efforts is compounded by profit-driven U.S. firms. Congress is unlikely to upset their donor-class and remove controversial provisions from the legislation. This is another instance of American leaders failing to do the right thing in favor of increased campaign donations and K Street-funded cocktail hours. China will continue to exploit our technology, and money managers will continue to siphon funds from government spending programs. – D.M.)

CHINA OFFERS RUSSIA ALTERNATIVE TO SWIFT: Washington’s new sanctions against Russia appear less threatening than President Biden’s rhetoric, leaving out an exclusion from the SWIFT international payments system. Should the U.S. decide to implement SWIFT sanctions, China is prepared to offer its Cross-Border International Payments System (CIPS) as an alternative to SWIFT. The CIPS alternative would prevent the U.S. and its allies from imposing restrictions on Russian international hard-currency transactions. CIPS uses China’s Yuan as its primary currency, which provides a lower 1% inflation rate in a currency that has gained 8% on the U.S. dollar since the COVID recession. (AC: Should Russia choose to join CIPs as an alternative to SWIFT, it would shift its payments out of the dollar system, resulting in a blow to American prestige. De-dollarization of trade is currently under debate in Western Europe, and Russia could potentially lead the effort, resulting in significant financial impacts on the U.S. economy. – M.M.)


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