This document discusses how sanctions against Russia due to its invasion of Ukraine will have economic costs for countries and businesses connected to Russia. It summarizes that Russia is a major exporter of commodities like oil, gas, wheat and fertilizers. Many European and other countries rely on Russia for these exports. As sanctions cut ties to Russia, prices for these commodities are expected to rise, causing economic pain. The document suggests wheat and fertilizer shortages could particularly destabilize food markets in the Middle East, Asia and Africa if Russia uses exports as political leverage in the ongoing conflict.

1. By: www.ProfitableInvestingTips.com

2. As evidence of atrocities by Russian forces in
Ukraine mounts it is leading to more and more
sanctions. As nations and individual
companies go forward, they need to consider
the cost of disconnecting from Russia and the
various ways in which they can ease the pain.

3. As Russia continues its attempts to win in
Ukraine by wholesale slaughter of civilians and
destruction of infrastructure it will be more and
more difficult for countries and businesses to
want to deal with Russia, we can expect a
wholesale reshuffling of trade relationships.
But, before that reshuffling takes place there
will be a cost of disconnecting from Russia for
everyone, including individual investors.

4. Russia As a Supplier of Commodities

5. Senator John McCain was the one who first said
that Russia was a large gas station pretending
to be a country. Not only is Russia a major
exporter of fossil fuels they are also of critical
importance in exporting fertilizers, wheat, corn,
strategic minerals, nuclear reactors, iron, steel,
and more. Statista lists Russian exports by
value in US dollars.

6. Mineral fuels and oils: $141.92 billion
Precious metals, stones, pearls: $30.36 billion
Iron and steel: $16 billion
Cereals: $9.34 billion
Nuclear reactors, boilers, machinery: $8.3 billion
Wood and wood products: $8.2 billion
Fertilizers: $6.99 billion
Copper and copper products: $5.65 billion
Aluminum and aluminum products: $5.46 billion

7. The biggest source of revenue for Russia is in the
realm of oil, natural gas, and coal. This is where
the EU finds itself in a bind as they have
allowed themselves to become so dependent of
Russia for the sources of energy to run their
societies and economies. However, just as
important, or more so to some, are the cereals
and fertilizers that Russia exports.

8. Many nations in the Middle East, Asia, and Africa
rely on Russia (and Ukraine) for their corn and
wheat as well as their fertilizers. We wrote
about the crisis that will arise if Ukraine has
no harvest or is unable to ship its grains. The
pain and civil chaos from food shortages will
be greatly compounded as Russia threatens to
cut off food and fertilizer supplies to nations
that do not support its war in Ukraine.

9. Wheat Export Pain and Profit

10. Russia counts for 24% of world wheat exports
followed by Canada and the USA contributing
25% together. France counts for 10%, Ukraine
for 9%, Australia for 6.7% and Argentina at
6.4%. To the extent that Ukraine cannot harvest
this year’s winter wheat crop or cannot bring it
to market that will drive the price up.

11. Stored wheat could act as a buffer, but the two
largest stockpiles are in India and China and
are kept as emergency food reserves. Outside
of these two nations the US has the largest
wheat reserves at 27 million tons, the EU has
13 million tons, and Russia has 8 million tons
according to Agrifuture Magazine. Canadian and
US wheat farmers have their winter wheat
crops in the ground and, baring awful weather,
can expect historic wheat prices at harvest.

12. Last 20 Years of Winter Wheat Prices

13. Food As a Weapon and Food Riots

14. As the war in Ukraine shifts to the East and
South, it could turn into more set piece battles
instead of Ukraine beating the Russians with
small unit, hit and run tactics. It could drag on
for months if not years. As the prospect of a
prolonged war emerges Putin is seen meeting
with leaders from the Middle East making the
point that allies of Russia will get food and
enemies will starve.

15. The cost of disconnecting from Russia will
include whatever chaos Putin is able to cause to
advance his goal of reinventing the Soviet
Union. The fallout from this situation goes far
beyond US companies pulling out of franchise
agreements in Russia to providing
opportunities for Wyoming coal producers like
Peabody Energy and wheat farmers in North
Dakota and Manitoba.

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