Good morning, and welcome to the Global Situation Report for Friday, 04 October 2024.
- BRAZIL’S DROUGHT TO RAISE GLOBAL FOOD PRICES: Brazil is grappling with historic wildfires and lower-than-expected rainfall, with only three of the Amazon’s 32 river basins experiencing positive rainfall volume, devastating the country’s crop yields, shrinking riverways, and restricting river transport. Since late 2023, nearly 60% of Brazil has experienced drought conditions.
- Brazil is a major global supplier of agricultural commodities, including coffee, cotton, fruits, vegetables, sugar, soybeans, and beef, and the United States’ second-largest trading partner, with roughly $38 billion in exports to the United States.
- The price of coffee is a key indicator of rising food prices, and over the past four years there has been a 23.2% increase, with arabica coffee futures surging 11% in September alone.
Why It Matters: Brazil’s ongoing drought will surely impact U.S. markets for months to come, particularly food prices at the grocery store. Shrinking waterways poses an additional risk to U.S. supply chains, with semi-finished iron and steel products, air and space components, wood, and other industrial products likely affected. – M.N.
- Global Rollup
- Russia intercepted another Ukrainian drone near the Kursk nuclear power plant (KNPP). Kremlin Spokesman Dmitry Peskov warned “Kiev is continuing to play with fire, and we will naturally bring this to the attention of the IAEA’s representatives.” (The KNPP is similar to the Chernobyl NPP, according to the IAEA. A hit here resulting in nuclear leakage is likely to be taken as a nuclear attack on Russian soil. – J.V.)
- Kim Jong Un threatened the immediate use of nuclear weapons against South Korea if South Korea were to “attempt to use armed forces encroaching upon the sovereignty of the DPRK.” (Between North Korea’s increased belligerence and nuclear advantage, doubts about the U.S.’ commitment to defending South Korea, and Japan’s new Prime Minister having a record of calling for nuclear weapons development, South Korea may be pressured into developing nuclear weapons of their own. This would likely kick off an arms race inside the Asian Pacific. – J.V.)
- Iran’s Foreign Minister arrived in Beirut this morning, according to Lebanese media. Meanwhile, Israel conducted a missile strike near the Beirut airport early Friday morning according to Lebanon’s Transport Ministry.
- Taiwan’s Semiconductor Manufacturing Company (TSMC) announced a new memorandum of understanding with Amkor to “bring advanced packaging and test capabilities to Arizona, further expanding the region’s semiconductor ecosystem.” (This move will shore up semiconductor supply chain security with local testing and packaging. However, it also increases Arizona’s value as a target for gray zone warfare. – J.V.)
THAT’S A WRAP: This does it for today’s edition. Thank you for reading. If you know folks who would also like to receive this email, would you please forward it to them? We appreciate you spreading the word. – M.S.