War in Ukraine fuels commodity surge ahead of Saskatchewan budget release

Click to play video: 'War in Ukraine fuels commodity surge ahead of Saskatchewan budget release'
War in Ukraine fuels commodity surge ahead of Saskatchewan budget release
WATCH: Sanctions against Russia could bolster Saskatchewan's economy as key commodity prices rise – Mar 7, 2022

A farmer in western Saskatchewan has watched grain prices jump in the last few weeks, though he wishes it wasn’t a result of Russia’s invasion of Ukraine.

Because Canada and Ukraine grow similar types of wheat, the conflict has caused prices to rise dramatically in under two weeks.

The increase is helping ease the burden of a drought-stricken 2021.

“Feeling conflicted is a fair way to put it,” said Scott Owens, a Maidstone, Sask., farmer who is also the vice-president of the Agricultural Producers Association of Saskatchewan.

Ukraine and Russia combine for nearly one-third of the world’s wheat and barley exports.

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“It’s the nature of a global commodity, right? Your gain is usually the result of somebody else’s pain,” Owens said.

Shares in Saskatoon-based Nutrien have also jumped as a result of the conflict. As of Monday afternoon, stocks had gone up nearly 35 per cent in the last month, reaching $127.33 per share.

Nutrien, the world’s largest fertilizer producer, had already increased its potash production by nearly one million tonnes in 2021 in response to market demand, according to the company.

Concerns about tighter supply have intensified following Vladimir Putin’s invasion of Ukraine.

“This region is a key supplier of agriculture, energy and fertilizer products and further unrest or sanctions could impact global trade flows,” reads a statement from Megan Fielding, vice president of brand and culture communications at Nutrien.

“We will continue to monitor the situation and do our part to ensure our customers get what they need.”

Since Russian forces invaded Ukraine, the spot price of uranium has gone up roughly 17 per cent, according to Jeff Hryhoriw, a spokesperson for Saskatoon-based Cameco.

The mining giant is “watching closely” to see if further sanctions may impact its industry because two Russian state-owned enterprises account for about 15 per cent of total mined uranium production,  Hryhoriw said.

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“We’re going to watch to see if that increase is sustainable and that the market is truly calling for an increase to production on a longer term basis,” Hryhoriw said.

Last month, Cameco announced plans to restart the McArthur River mine and Key Lake mill operations in northern Saskatchewan, gradually ramping up output into 2024.

Oil remains the most lucrative commodity potentially fueling economic gains in Saskatchewan, according to Jason Childs, an associate professor of economics at the University of Regina.

On Monday, oil prices climbed to their highest point since 2008, with Brent crude reaching US$139.13 a barrel, while U.S. West Texas Intermediate (WTI) hit $130.50.

“Given what (the Saskatchewan government was) forecasting in the budget and given what oil prices are right now, we could be looking at $500 million (or) $600 million extra in revenue,” Childs said.

A November financial update projected a deficit of $2.7 billion, though Premier Scott Moe acknowledged the 2022-23 budget will likely come amid “a very dynamic revenue situation.”

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“(It) could potentially be a very temporary revenue situation,” Moe said. “We’re in day 12 of the Russian invasion in Ukraine and we’re seeing natural resources commodities move and move very quickly.”

Saskatchewan’s provincial budget is expected to be unveiled on March 23.

— with files from The Canadian Press, The Associated Press and Reuters

Click to play video: 'Russia’s invasion only partially fuelling sky-high gas prices'
Russia’s invasion only partially fuelling sky-high gas prices

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