Miller Magazine Issue: 124 April 2020

94 MARKET ANALYSIS MILLER / APRIL 2020 General export restrictions in the literal sense in tra- de practice do not happen often. Typically, such go- vernment actions are justified by a truly serious threat to food security. In this article, we will not consider the real threat of a pandemic declared in the world in terms of medical consequences. I confine myself to the fact that the measures taken have accelerated the slowdown in the global economy. Unemployment has risen sharply, many states are reviewing the budget and sending huge amounts of money both to special programs to combat the spread of the disease, and to support certain segments of the population, small and medium-sized businesses, and so on. There is no doubt that the global damage to the economy will be enormous, but now it is difficult to assess. Enterpri- ses stop or cut production due to quarantine, and oil demand has fallen to such a scale that it has fallen to levels almost 30 years ago. This forced an increase in production in order to compensate for the profit in monetary terms. But the storage tanks quickly ran out, and the trend of cheaper prices intensified. On April 9-10, oil producers met and agreed to reduce producti- on, but demand will not be restored at least until the end of quarantine. Such situation with oil (and, accordingly, alterna- tive fuel) has fallen off the grain and oilseeds market. Only wheat stood. The fact is that wheat is used for ani- mal feed and the producti- on of flour, but they do not make fuel from it. There are cheaper substitutes for this. All other crops, in additi- on to feed, are raw materi- als for ethanol or biodiesel, which means that their price correlates with oil. Cheap oil makes production unprofi- table. Of course, a global trend with a small time lag affected the Black Sea corn. At the same time, wheat was supported by infor- mation about the poor condition of crops in the Black Sea, namely, Ukraine and Romania, drought in Euro- pe, as well as a significant reduction in areas in Ukrai- ne, France, and the USA. Part of the losses will be offset by good expectations in Russia, as well as high expectations for the harvest of Argentina and Australia, but today it is a trade of expectations. Potential problems with logistics and the