Wall Street Silver Official Podcast: Energy Crisis Leading to Food Shortage This Year
Traders have largely been focused on precious metals, energy, and commodities like wheat in the past month, as Russia’s invasion of Ukraine has had major impacts on those markets.
However, both countries are large producers of fertilizer. Production looks set to come in at devastatingly low levels this year. That suggests that the combination of high energy prices and high fertilizer prices will continue. That will likely lead to outright food shortages.
As Steve St. Angelo explains, Europe is first in trouble given their huge energy imports from Russia. The Eurozone imports as much as 75 percent of natural gas from Russia.
Fertilizer companies are already starting to report cut production due to high energy prices. Or, for a total lack of natural gas at any price. The commodity is key component for manufacturing fertilizer, and the disruption to the supply now is only just starting.
With the spring planting season now underway, it’s likely that high energy prices will lead to lower food production. That’s because high energy prices lower fertilizer production.
Added to the lack of exports on the wheat market from Ukraine and Russia right now, and it’s likely that food shortages are a real possibility later in the year.