After the start of the war between Russia and Ukraine, the international wheat market recorded strong highs. In Chicago, prices closed the session of Thursday (24) at the high limit for the day. 

Fertilizer prices have not yet varied significantly, but the trend is also valuation.

Analysts at the consultancy Safras e Mercado, Élcio Bento, a wheat specialist, and Maísa Romanello, a fertilizer specialist, commented on the matter. 

Wheat

According to Bento, commodities are risky assets and typically uncertainties cause investors to liquidate their positions and seek safer assets. "This specific situation, for wheat, is different, because the Black Sea region, where Russia and Ukraine are located, is where there is more wheat in the world."

He recalls that the possibility of conflict was already on investors' radar. "The concern now is that prolongation could lead to shortages. In addition to the immediate effects of demand redirection, there are uncertainties about the maintenance of crop crops for the next commercial year."

The analyst points out that it is too early to measure the potential effect of the crisis.

Fertiliser

For fertilizers, according to Romanello, the conflict brings back uncertainty to Brazil. "The previous expectation, still in February, was a drop in urea prices in Brazil. This is over. Now the main word, again, is uncertainty," he lamented.

She explains that the rise in prices should take time to be felt in Brazil, since the product is imported. "There is a certain 'delay' until producers start buying fertilizer swells and feel the high," he noted.

The rise in prices basically takes into account sanctions on Russia, which should stop its production of natural gas, thereby raising prices for this which is the main raw material for nitrogen fertilizers. This can also affect coal prices, which is also an important raw material. The same goes for oil, which, in addition to raw material, also affects the costs of sea freight.

Source: Canal Rural