Putin’s energy shock is turning into a global food crisis, so prepare for rationing Business

“Charging is stopped. It’s not just the ports: you can’t bring a ship into them. Nobody wants to get stuck,” Abbassian said. Lloyd’s List reports that the northern Black Sea and Azov have been declared “warfare operations zones”, which means double pay for crews, if you can get them.

Insurance rates are prohibitive and banks refuse letters of credit, even though grain, fertilizer and energy products are exempt from sanctions. Shippers are scrambling to find out what it means for a counterparty to be “connected to Russia”.

Everyone is wary of the US Treasury Sanctions Police, known as OFAC. US law firm Crowell and Moring says its clients fear they will be inadvertently caught in the net, given that the targeted oligarchs control much of Russia’s agribusiness nexus one way or another . Every transaction must be scrutinized down to the smallest detail.

“Russian and Ukrainian wheat is not offered. Critical maize flows to the world are blocked. If Ukrainian farmers do not plant substantial amounts of maize next month, the supply shortage will be very serious,” Rabobank said.

Small Russian farmers were shut out of the domestic credit market just before the sowing season. The central bank’s emergency tightening took the average cost of lending to 27% this week.

Chicago wheat futures hit a record high of $1,131. The pressure is worse for the rest of the world as the broad dollar index is up 30% since the last peak in 2008.

For good measure, Rabobank says we face intense the girl weather conditions and drought in Brazil and Argentina. “Grain shortages are likely to be so severe that they will require demand destruction or rationing,” he said.

The International Monetary Fund’s commodity index – purer than misleading stock indices – shows that commodities are more expensive today overall in real terms than they were in 2008 even in dollars. It is much higher for Europe or Africa. It quickly resembles the commodity shock of the early 1970s.

Brent crude hit an all-time high in both euros and pounds yesterday morning. But unlike the last oil shock, this shock has spread to all energy sectors. European natural gas contracts for the month of April reached a new record of 198 MWh. Thermal coal is up 75% this month.