Russia’s currency, the ruble, collapsed in value this week, falling to an all-time low against the US dollar.
Over the last six months, the currency has lost more than half its value as Russia’s economy slides into recession under the weight of international sanctions stemming from Russia’s invasion of Ukraine.
Additionally, the global crude oil sell-off is hitting Russia especially hard, as Putin’s government needs prices over $100 per barrel to balance its budget. With oil trading near $56 on Friday, there are likely to be further headaches for Russian politicians and economists in the months to come.
In an effort to stop the ruble’s free-fall, the Russian central bank intervened this week, raising interest rates to 17%, but the actions have had little impact thus far.
On Friday, the ruble was worth a mere 1.5 cents, a far cry from the midsummer high near 3 cents.
Wheat Squeezed Higher
Wheat prices blew over $7 per bushel for the first time since summer, buoyed by supportive news from two Cold War era foes.
Russia, the world’s fifth-largest wheat exporter, has seen its wheat exports slow to a trickle as its currency crisis, rising domestic prices, and increasing international sanctions prevent the sale of grain onto the global marketplace. With a smaller global supply, more buyers may be looking to the United States for their wheat.
Meanwhile, as US relations remain strained with Russia, the Obama administration announced this week that it was restoring diplomatic ties with Cuba, ending a half-century trade embargo. For US farmers, this means that a new market just 90 miles offshore will be opened to buy their grain, especially wheat. The grain is Cuba’s second-largest import (after petroleum products), and it is expected that the US could soon be selling nearly twenty million bushels annually to Cuba, giving a boost to Midwestern farmers.
Between Russia’s restrictions and optimism about new sales to Cuba, wheat rallied as much as 70 cents per bushel this week, with the March Kansas City wheat contract trading Friday for $6.70.