American agricultural firms with offices in Ukraine are closing their facilities there after Russia invaded the country, the Wall Street Journal is reporting. On Thursday, a spokesperson for Archer Daniels Midland Co. said that the crop trading and processing company ceased operations in its Ukraine-based facilities. ADM’s Ukraine facilities employ more than 630 people and include an oilseed crushing plant in Chornomorsk, a grain terminal in the port of Odessa, and six grain silos and a trading office in Kyiv.
Additionally, agriculture firm Bunge Ltd. also said on Thursday that it has closed offices and suspended operations at processing facilities in two cities in Ukraine. Bunge employs more than 1,000 workers in Ukraine who operate two processing facilities as well as grain elevators and a grain export terminal in various parts of the country.
Meanwhile, farm cooperative CHS Inc. has also been winding down its export activity in Ukraine for the past few weeks. Though the grain shipper and retailer of seeds and chemicals doesn’t own any port operations in the country, it employs 46 people in the region.
President Joe Biden announced new sanctions on Russia on Thursday in response to the country’s full-scale invasion of Ukraine, condemning Russian President Vladimir Putin for his aggression. The U.K. also unveiled more measures against Russia on Thursday before the European Union, Japan, Australia, New Zealand, and Taiwan hit Moscow with new injunctions on Friday.
These agricultural giants shuttering operations in Ukraine could have huge implications for the Invesco DB Agriculture Fund (DBA), which invests in a diversified basket of various agricultural natural resources. The fund seeks to track changes in the level of the DBIQ Diversified Agriculture Index Excess Return plus the interest income from its holdings of primarily U.S. Treasury securities and money market income.
The index is a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities. The fund and the index are rebalanced and reconstituted annually in November.
DBA has an expense ratio of 0.93%.
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