By Interim CEO Alastair Cameron on
26 October 2023
While we have been distracted by seasonal changes, cost of living increases and domestic politics, the world outside has become a significantly more tumultuous place.
Currently there exists the biggest armed conflict since WW2 in the Ukraine and the most serious crisis in the Middle East for 70 years.
In addition there has been armed conflict between Armenia and Azerbaijan, and an escalating armed standoff between Serbia and Kosovo
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Across the Sahel region of Africa there have been military coups in: Mali, Niger, Chad, Sudan and unrest in the Central African Republic. Some assisted by Russian funded Wagner mercenaries.
In the South China Sea Territorial disputes over maritime claims in the region continue involving the People's Republic of China, Taiwan, Brunei, Malaysia, the Philippines, and Vietnam. Recently Chinese ships sprayed a Philippine vessel with high-powered water cannon. China has also escalated incursions by warplanes into Taiwan’s air defence zone.
North Korea continues to develop its ballistic missile program while also being suspected of supplying arms to Russia.
Crude oil prices jumped by 33% after the Russian invasion of Ukraine but returned and levelled out within six months however the price of petrol at the pump has remained high. The global price of wheat also spiked and has remained high in some markets. This has had a flow-on effect to food prices and availability, especially on developing countries that rely on imports.
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With the impending European winter and oil-producing nations such as Saudi Arabia and Russia limiting their supply, energy prices will remain high for the foreseeable future.
The conflict between Israel and Hamas has only served to put more pressure on global oil prices. Shortly after the outbreak of the current Middle East conflict, oil prices jumped 4 per cent, an increase which is yet to flow through the supply chain and affect prices at the pump.
Furthermore, there is uncertainty surrounding the conflict's impact on the availability and pricing of fertiliser. This season saw a shortage of urea in some states, and after an increase in demand, many farmers had to restrict and budget their applications.
As the war continues between Russia and Ukraine, and the conflict in the Middle East trends to escalate, oil and energy prices will remain volatile, the Aus:USD exchange rate will fluctuate all of which will affect domestic markets, the cost of farm inputs and the cost of living.