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War, Climate Change, Energy Costs: How the Wheat Market Has Been Upended

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War, Climate Change, Energy Costs: How the Wheat Market Has Been Upended

The worth of wheat has tumbled from its peak after Russia invaded Ukraine, however consultants say one of many world’s most generally consumed meals stays in brief provide and warn {that a} world starvation disaster nonetheless looms.

Like oil, metal, beef and different commodities integral to the economic system, wheat shifts in value and availability in response to a posh set of overlapping components, resembling geopolitics and the climate. Whereas the falling value of wheat presents some respite for nations depending on importing the crop, it might dissuade farmers from planting extra. Nor does the drop in value handle pre-existing issues worsened by a conflict between two of the world’s largest producers. Vitality costs stay excessive, affecting the price of working farm tools and transporting the wheat to market in addition to the price of fertilizer. And sizzling, dry climate that crimps crop yields is turning into extra widespread.

“The elemental image hasn’t actually modified,” mentioned Ehsan Khoman, who manages emerging-market and commodities analysis for Mitsubishi UFJ Monetary Group, a Japanese financial institution. “There’s a potential the place meals costs may spiral uncontrolled.”

Russia’s invasion of Ukraine prompted meals and gas costs to soar, as conflict and sanctions disrupted provides from two of the world’s main agriculture and vitality exporters. The 2 nations collectively account for roughly 1 / 4 of world wheat exports, based on the U.S. Division of Agriculture.

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Oil costs have eased a bit because the begin of the conflict, although it nonetheless prices much more than it did firstly of the 12 months for Individuals to fill their vehicles with gasoline, for Europeans to warmth their houses with pure fuel and for almost anybody wherever to do something linked to the price of oil. Wheat costs, although, have fallen to roughly the place they started the 12 months.

The worth of a extensively traded sort of wheat that began the 12 months about $7.70 per bushel jumped to $13 within the rapid aftermath of Russia’s invasion of Ukraine in late February, based on futures contracts traded in Chicago, a world hub for the commodity. The worth largely stayed in double digits till mid-June, when it started to fall. On Friday, wheat traded at a little bit greater than $8 a bushel.

After the preliminary shock of the invasion, greater costs dissuaded some nations from shopping for wheat, decreasing demand and weighing on costs. An uptick in provide from winter wheat harvests has additionally lowered costs in current weeks.

A significant factor pushing wheat costs down has been the progress of negotiations over the destiny of greater than 20 million metric tons of grain caught in Black Sea ports in Ukraine. A bit over every week in the past, an settlement was reached to open an export hall to permit a few of the grain trapped by the conflict to maneuver out internationally.

The deal could not maintain amid the preventing, and even when it does, consultants say it most likely gained’t be sufficient to handle different points hanging over the worldwide wheat market.

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“This settlement has been bigged up as one thing that will likely be an answer to the world’s meals scarcity, and it’s simply not,” mentioned Tracey Allen, an agricultural commodities strategist at JPMorgan Chase.

Different, extra entrenched components within the wheat market, from the costs of vitality and fertilizer to local weather change, may play a much bigger position in figuring out the price — and availability — of a loaf of bread world wide.

Consultants assume wheat costs are prone to rise once more. Including additional uncertainty is that futures contracts work by permitting consumers and sellers to agree on a value for wheat that will likely be delivered sooner or later, usually three months’ time. And lots can change in three months.

“Costs are going to stay greater, and shoppers are going to really feel that within the value of merchandise they buy on grocery store cabinets,” Ms. Allen mentioned.

Droughts final 12 months meant that even earlier than Russia invaded Ukraine, world meals markets have been beneath stress.

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Whereas some areas like Argentina noticed bumper crops, and Russia is predicted to have a hefty harvest this summer time, extreme warmth and low rainfall affected the quantity of wheat that others may develop.

In Canada, temperatures soared to new data. On the finish of July 2021, about three-quarters of the nation’s agricultural land was labeled as abnormally dry. Canada’s wheat manufacturing dropped practically 40 % from 2020 to 2021, inflicting its exports to Latin America and the Caribbean to say no by over 3 million tons, based on the usD.A.

The decline in world provide ensuing from unhealthy climate had already helped push up costs coming into this 12 months. In January 2020, wheat was about 30 % cheaper than it’s now.

Canadian wheat manufacturing is predicted to select up over the following 12 months. The spring crop in the USA, led by North Dakota, can also be anticipated to be strong. However Europe has been affected by a warmth wave, elevating concern a few weak yield, whereas India banned exports of wheat in Might due to drought.

Consultants warn that fluctuations within the climate are prone to change into extra pronounced, including to the uncertainty over world manufacturing and the path of costs sooner or later.

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Oil costs largely decide the price of working farm tools and transporting harvested grain. Pure fuel costs are much more essential to farmers as a result of nitrogen, used to provide fertilizers like ammonia and urea, is produced from pure fuel.

“It’s not nearly grain costs — it’s transport prices and gas costs and fertilizer costs and so forth,” mentioned Luiz Eduardo Peixoto, an economist specializing in rising markets at BNP Paribas.

Russia, the most important producer of fertilizer on this planet, has steadily restricted the movement of pure fuel to Europe, not solely driving gas costs greater but additionally nudging up the price of nitrogen-based fertilizers. As fertilizer costs have risen, so have wheat costs, ticking up previously week.

As a result of Russian fertilizer is so essential to the worldwide farm commerce, it has averted worldwide sanctions which have restricted different Russian exports, giving Moscow political leverage over one other essential commodity that the world wants.

Increased prices for gas and fertilizer eat into the revenue that farmers could make and create a quandary for wheat-producing nations. That’s significantly true for Ukraine, the place transporting wheat to consumers overseas has change into pricey due to the conflict, mentioned Dan Basse, an agricultural economist and president of AgResource, an analytics firm.

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Whereas excessive costs damage nations that import wheat, low costs would possibly dissuade farmers from planting further this 12 months, particularly in Ukraine as they deal with challenges promoting their present crop, which may make them unable to afford to develop extra.

Egypt and Indonesia rely closely on Ukrainian wheat, and famine-struck Somalia imports wheat primarily from Ukraine and Russia.

The united statesD.A. forecasts that the 18.8 million metric tons of wheat that Ukraine exported over the previous 12 months will fall to round 10 million within the coming 12 months.

“Farmers can’t afford to plant that subsequent crop,” Mr. Basse mentioned. “We want world wheat costs to rise for farmers to increase planting within the upcoming rising season.”

But even when costs rise sufficient to encourage extra planting, that will show irrelevant when grain storage is overflowing as farmers battle to maneuver crops round battle areas.

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“It nearly doesn’t matter how excessive costs are,” Ms. Allen of JPMorgan mentioned. “It doesn’t remedy the issue of getting wheat off the farms.”

Worldwide companies have issued repeated warnings about how altered commerce patterns after the conflict in Ukraine may hold costs for commodities like wheat greater than ordinary. However some consultants say the warnings should not being heeded.

“The problems affecting meals markets haven’t been solved,” mentioned Mr. Khoman of Mitsubishi UFJ Monetary Group. “There may be nonetheless a scarcity.”

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Albertsons to pay $3.9 million over allegations it overcharged, lied about weight of groceries

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Albertsons to pay .9 million over allegations it overcharged, lied about weight of groceries

Grocery titan Albertsons will pay $3.9 million to resolve a civil law enforcement complaint alleging that it ripped off customers at hundreds of its Vons, Safeway and Albertsons stores in California, authorities said Thursday.

According to the complaint, groceries sold by Albertsons Cos. — including produce, meats, baked goods and other items — had less product in the package than indicated on the label. The company also is accused of charging customers prices higher than its lowest advertised price.

“False advertising preys on consumers, who are already facing rising costs, and unfairly disadvantages companies that play by the rules,” L.A. County Dist. Atty. George Gascón said. “This kind of corporate conduct is especially egregious when it comes to essential groceries, as Californians rely on accurate advertised prices to budget food for their families.”

The case was filed in Marin County Superior Court in partnership with the consumer protection units of the district attorney’s offices of Los Angeles, Marin, Alameda, Sonoma, Riverside, San Diego and Ventura counties.

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The settlement will be divided among the seven counties and used to support future enforcement of consumer protection laws, according to the Marin County district attorney’s office. None of the money will be paid back to consumers.

The fine comes just over a year after the same company was ordered to pay $3.5 million for selling expired over-the-counter drug products. The company is also currently fighting a federal antitrust lawsuit that seeks to block its planned merger with grocery giant Kroger Inc.

Albertsons Cos. operates 589 Albertsons, Safeway and Vons stores in California. The company did not admit wrongdoing. It cooperated with the investigation and has taken steps to correct the violations, according to the L.A. County district atttorney’s office.

In a statement on the settlement, the company said it takes the matter seriously and is committed to ensuring its customers can shop with confidence.

“We have taken steps to ensure our price accuracy guarantee is more visible to customers by posting signage at multiple locations at the front of our stores,” the company stated. “We have conducted additional comprehensive training for associates to reinforce the importance of price accuracy and customer transparency. Additionally, we have enhanced price tracking systems to better ensure real-time accuracy at stores.”

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Prosecutors in the lawsuit alleged that the company failed to implement a price accuracy policy ordered by a court in 2014.

The policy requires that customers who are overcharged for an item either receive the item for free or receive a $5 gift card, depending on which option is worth more. It is designed to encourage customers to immediately report false advertising.

Under the judgment reached Thursday, the grocery giant must implement this policy and ensure staff are properly trained to place accurate weight labels on products.

The serial overcharging was discovered through inspections by Marin County’s Department of Agriculture, Division of Weights and Measures and its counterparts across the state.

“We could not have achieved this result without the outstanding work of our Weights and Measures inspectors as well as vigilant consumers,” said Deputy Dist. Atty. Andres Perez, who prosecuted the case for Marin County.

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For the next three years, Albertsons Cos. is required to hire an independent auditor to ensure it is complying with the terms of the judgment.

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Disney faces class action lawsuit over employee data breach

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Disney faces class action lawsuit over employee data breach

Walt Disney Co. has been hit with a class action lawsuit accusing the Burbank-based entertainment giant of negligence, breach of implied contract and other misconduct in connection with a massive data breach that occurred earlier this year.

Plaintiff Scott Margel submitted the complaint on Thursday in Los Angeles County Superior Court against Disney and Disney California Adventure. The 32-page document also accuses the company of violating privacy laws by not doing enough to prevent or notify victims of the extent of the leak.

The class members, estimated to number in the thousands, are described in the complaint as individuals who gave “highly sensitive personal information” to Disney in connection with their employment at the company — information that was allegedly compromised in the breach.

Representatives of Disney did not immediately respond Friday to The Times’ request for comment.

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The lawsuit cites an article published in September by the Wall Street Journal, which reported that a hacking group known as NullBulge publicly released data spanning more than 18,800 spreadsheets, 13,000 PDFs and 44 million internal messages sent via the workplace communication platform Slack.

According to the Journal, the compromised Slack messages contained sensitive information belonging to Disney cruise employees, including passport numbers, visa details, birthplaces and physical addresses; at least one spreadsheet listed the names, addresses and phone numbers of some Disney Cruise Line passengers. The publication later reported that Disney planned to stop using Slack after the breach.

The plaintiff and class members “remain, even today, in the dark regarding which particular data was stolen, the particular malware used, and what steps are being taken, if any, to secure their [personal information] going forward,” the complaint reads.

The plaintiff and class members “are, thus, left to speculate as to where their [data] ended up, who has used it and for what potentially nefarious purposes.”

In July, NullBulge said that it had leaked roughly 1.2 terabytes of Disney data in rebuke of the company’s treatment of artists, “approach to AI” and “pretty blatant disregard for the consumer.” The self-proclaimed hacktivists told CNN that they were able to penetrate Disney’s system thanks to “a man with Slack access who had cookies.”

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A Disney spokesperson said in a statement at the time that the company was “investigating this matter.”

Margel is demanding that Disney take steps to reinforce its security system and educate class members about the risks associated with the breach. The plaintiff is also seeking unspecified damages and a jury trial.

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Rivian cuts production forecast, citing supply chain issue; its stock dips

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Rivian cuts production forecast, citing supply chain issue; its stock dips

Electric vehicle maker Rivian saw its shares dip Friday after the Irvine-based company cut its production targets amid ongoing supply issues.

Citing a shortage of a component used to build its electric pickups, sport utility vehicles and vans, Rivian said production could drop as much as 18% this year at its lone U.S. assembly plant.

Rivian did not specify the part that is in low supply but noted that the shortage has become more acute in recent weeks.

The company now forecasts its full-year production will be between 47,000 and 49,000 vehicles, down from an earlier estimate of 57,000. During the most recent quarter, Rivian produced 13,157 vehicles and delivered 10,018, falling short of analysts’ expectations.

Shares of Rivian ended the day at $10.44, down 3.2%. The company’s stock has been battered since the start of the year, falling by more than 50% amid underwhelming financial reports. In the second quarter this year, Rivian posted a net loss of $1.46 billion compared with a loss of about $1.12 billion during the same period a year earlier. The company is scheduled to announce its third-quarter earnings next month.

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Rivian received a lifeline in June when Volkswagen agreed to a massive investment in the company that is expected to total $5 billion. Rivan has nonetheless continued to struggle in the face of dropping demand for electric vehicles and other supply chain issues that forced the company to pause its production of commercial vans for Amazon.com in August.

Early this year, the automaker announced a 10% cut in its workforce that sent stocks plummeting 25% in one day. The pool of interested wealthy buyers who don’t already own an electric vehicle is shrinking, analysts said, while the broader market weighs the advantages and feasibility of switching to electric.

The average car buyer is not likely to be able to afford a Rivian vehicle, and concerns remain about charging infrastructure and the distance vehicles can drive on a single charge. Rivian’s R1T electric pickup truck starts at around $70,000; its R1S SUV starts at nearly $75,000.

With sleek design and outdoorsy features, Rivian’s vehicles garnered much attention from analysts and attracted investors such as Amazon and Volkswagen. The company exceeded expectations during its initial public offering of stock in 2021, ending its first day of trading valued at nearly $88 billion.

The production issues announced this week could get in the way of Rivian’s goal of achieving positive gross profits by the fourth quarter of this year. According to analysts, the company’s gross margins are expected to remain in negative territory in the final three months of 2024.

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