Economic Tidbits

Will Another War Break Out?

Given the global marketplace in which Nebraska producers operate, happenings overseas will again influence the state’s producers in 2023. Russia’s invasion of Ukraine in February provided ample evidence of this. The invasion triggered disruptions in energy, fertilizer, and commodity markets, all affecting Nebraska producers. The conflict is in its eleventh month with no signs of easing and will likely have a few surprises in store affecting agricultural markets.

Events in China also play a role in Nebraska agriculture. China is typically one of the top five purchasers of Nebraska agricultural goods and a major player in world energy and fertilizer markets. China’s change in policy regarding COVID, its slowing economy, and its churning politics bear watching. Add in political and military tensions between China and the U.S. over Taiwan, human rights issues, and dominance in Southeast Asia, and the tenor of one of Nebraska’s largest markets could change quickly. Chinese purchases of U.S. agricultural products have slowed, and the USDA projects the slowdown will continue.

As competitors to the U.S. in world commodity markets, politics and drought in Brazil and Argentina bear watching. Brazil and Argentina are experiencing dry weather, Argentina more so than Brazil, which could impact global corn, soybean, and wheat supplies. Each country also has its own political and economic troubles. Brazil is in the midst of a shaky transition of power following a contentious presidential election. Argentina is suffering from inflation which at times reached nearly 100 percent last year.

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