By Daniel Christian Henrique
February was marked by the beginning of the war in Ukraine and its impacts on the supply and prices of some commodities around the world. By the end of the month, stock market indexes around the world were still stable. See below.
Oil and gas shoot
The war in Ukraine that began at the end of February generated consecutive increases in the barrel of Brent and WTI oil to reach the highest values in the last ten years (beating the highs from the time of annexation of Crimea by Russia), along with the increases in the prices of nickel, natural gas and aluminum, in the face of the possible reduction in the supply of these commodities (CORREIO BRAZILIENSE, 2022a). Whereas Russia exports approximately 40% of the gas used in Europe as well as being the second largest exporter of crude oil, such increases were expected. Today, in early March, the U.S. has already decided not to import Russian oil and natural gas anymore, even raising fuel prices in its domestic market, with support from 71 percent of its population. The European Union already plans by the end of the year to reduce about two-thirds of its Russian gas imports. The European Union and U.S. economic sanctions measures against the Russian economy intensify day after day (CNN, 2022a) which leads to the search for alternative sources of energy commodities by importing countries, with the aim of alleviate the imbalance in their prices in the medium term.
Corn and wheat shoot, too... The meat will continue to accompany
It wasn't just the record-breaking energy commodities, some grain commodities as well. Russia and Ukraine are one of the world's largest wheat exporters, led by the former. Together they represent an expressive 30% of the world's production of this commodity. Wheat prices on the Chicago stock exchange reached 450 euros, while at the beginning of the year they were around 250 euros, the highest in the last 14 years (ISTO É DINHEIRO, 2022; ESTADO DE MINAS, 2022; CORREIO BRAZILIENSE, 2022b). Wheat production is expected to expand in the Brazilian cerrado for the next 5 to 10 years. Until then, the day-to-day bread will go up.
Interruptions in the shipment of corn in the ports of Ukraine as well as possible crop losses in the northern hemisphere with the war, are also already catapulting the quotations of these grains (CORREIO BRAZILIENSE, 2022b). In time: rising corn, basic grain for livestock, pigs and poultry rations, the price of protein commodities rises (CNN, 2022b). The price of meat on the Brazilian's plate had already been high since last year, but had some improvement and softening, now it will increase again.
Chicken meat hits export record, after all
Despite the forecast of protein elevation in general, chicken meat had its best performance in exports for the month of February in history! There was a 5% gain compared to February 2021, totaling 339,751 tons exported (AGROLINK, 2022). Santa Catarina benefited heavily, increasing its exports by 30% compared to the previous month, totaling US$ 129.7 million in sales of 80,800 tons. The increase stems from the expansion of imports from China, Saudi Arabia and Japan. But now will face the challenge of raising rations in the coming months with the rise of corn (GOVERNO DE SANTA CATARINA, 2022)
Revised IPCA and IGPM
Inflation projections for February had slight adjustments in the latest projections, from 0.88% predicted to 0.89%. However, in January it was projected to be 0.85% higher (ISTO É DINHEIRO, 2022b). It will now be clear how much the war and commodity rises, mainly, will have impact from this month on the IPCA that had already been galloping back-to-back highs. The estimate for this index by the end of the year already beats 5.61%, and its target was 3.5%. The IGPM, in turn, has a new projection of high, reaching 8.54% according to the Focus Bulletin of BC, already considering the international increases in commodities (ISTO É DINHEIRO, 2022c)
IPI reduced by up to 25%, but prices not so much
The federal government approved a decree reducing by up to 25% the general rates of IPI (Tax of Industrialized Products), compared to the increases recorded in the collection of federal taxes in the previous year, making it possible to impact up to R$ 19.6 billion in 2022 (O TEMPO, 2022). The industry celebrates: lower spending! But does the final price for buyers on the tip line fall by the same percentage ratio? According to experts, consumers should not expect this, mainly due to the losses in profit margins that the industry has accumulated in recent years with the pandemic (REDE JORNAL CONTÁBIL, 2022). Based on the newly publicized price of Onix, the best-selling car currently in Brazil, there was a unbelievable reduction of R$ 10.00 (believe me!) in its most basic version, reaching R$ 50.00 in the more advanced versions. The automaker argues that the price should increase considering the adjustment table that would be in force were it not for the reduction of the rate, generating a greater real reduction (MOBIAUTO, 2022).
Fertilizers and the War of Ukraine
Brazil as one of the largest exporters of agricultural commodities in the world, clearly depends on a lot of fertilizer. And much of this is imported from Russia. Approximately 85% of the country's fertilizing is importing, being 23% of Russia - which is no small thing. This figure is 70% higher than the second country that exports the most by fertilizing Brazil, China. The problem will reach each type of fertilizer in specific: there are attempts to buy potassium from Canada, unsure of the realization; other fertilizers, in turn, have no shortage problems but the shortage tends to raise their prices (BBC NEWS, 2022).
Ibov stable
In the face of economic sanctions on the Russian economy coordinated by the Americans and the European Union, they enabled the world indices relative stability (considering that the war began almost at the end of the month). Ibov was no different, ending February with a slight rise of 0.9%, but all economies in the world still attentive to the events of the war (NOTÍCIAS AGRÍCOLAS, 2022). The rise was driven by Vale's elevations in the face of gains in iron ore and nickel from the war in Ukraine.
References (click on the titles to read the reports):
AGROLINK. Exportação de carne de frango tem seu melhor fevereiro da história (2022)
BBC NEWS. Guerra na Ucrânia: por que o Brasil depende tanto dos fertilizantes da Rússia? (2022)
CORREIO BRAZILIENSE. Guerra na Ucrânia dispara preços de petróleo, gás, alumínio e níquel, (2022a)
CORREIO BRAZILIENSE. Preços dos alimentos disparam em consequência da guerra na Ucrânia (2022b)
CNN. Biden proíbe importações de petróleo e gás natural russos para os Estados Unidos (2022a).
CNN. Guerra na Ucrânia deve causar alta no preço da carne no Brasil, dizem consultorias (2022b)
ISTO É DINHEIRO. Trigo: entenda como a guerra na Ucrânia pode fazer o preço do pão explodir (2022a)
ISTO É DINHEIRO. Projeção para IPCA de 2022 sobe de 5,56% para 5,60% no Focus do BC (2022c)
MOBIAUTO. Redução de IPI faz preço do Chevrolet Onix baixar em até… R$ 50 (2022)
NOTÍCIAS AGRÍCOLAS. Ibovespa sobe com Vale e exterior e fecha fevereiro no azul (2022)
O TEMPO. Redução de IPI em até 25% inclui automóveis e produtos industrializados (2022)
REDE JORNAL CONTÁBIL. Redução de 25% do IPI vai beneficiar os consumidores? (2022)