Ukraine

After Israel Strikes Iran, Heightened Focus on Wartime Premiums in Fertilizer Market

Fri, 13 Jun 2025 19:15:56 GMT

After Israel launched strategic strikes against Iran, fertilizer analysts are watching for the after effects.

“Nitrogen markets reacted overnight, significantly higher,” says Josh Linville, vice president of fertilizer at StoneX. “There’s a significantly higher urea market, at least in the North American marketplaces up about $50 to $60 a ton. International markets are up substantially as well as the market starts to factor in these wartime premiums, even though no production has been impacted.”

The geographical region in the Middle East is significant for production overall and has critical infrastructure for the global trade of nitrogen fertilizer and potash.

In 2024, Iran was the third largest global exporter of urea (4.5 million tons), and the country was the seventh largest exporter of anhydrous ammonia (800,000 tons). Other urea producers in the geographic region include Qatar, which is the second largest producer; Saudi Arabia, which is the sixth largest; and Oman, which is the seventh largest producer.

“Iran is obviously a major powerhouse,” says Josh Linville, vice president of fertilizer for StoneX.

He equates its importance in the global fertilizer trade volume equal to that of China.

“We spend a lot of time talking about how China can ebb and flow the marketplace based on their participation or lack thereof,” he says. “Iran is very, very close to the same size of what China normally is, so this could be the same as losing another China to the world.”

At the current moment, Linville isn’t concerned for damage or destruction of Iranian supplies of fertilizer.

“Israel’s attack on Iran was surgical. They went after the nuclear program and those attacks to it,” he says. “They’re not looking to take out [fertilizer] facilities, production.”

And the same goes for Iran’s response in attacking Israel, which is the fourth largest potash manufacturer.

“Iran, they’re looking for more of the population strike. They are trying to get the news worthy videos and attacks from that standpoint,” he says. “They’re not really targeting infrastructure, either. They’re not going after things like potash manufacturing.”

Linville’s colleague at StoneX, Arlan Suderman, details why this conflict is being watched so carefully if the concern isn’t in those two countries’ production.

“There’s a lot of other producers of fertilizer in the Middle East and a lot of it also passes through the Strait of Hormuz, which will be at risk going forward now,” Suderman says.

From a global supply standpoint, Suderman also points out the Ukrainian attack of one of Russia’s largest nitrogen fertilizer plants two weeks ago.

With ongoing and new conflicts and strikes in key fertilizer production areas, Linville foresees needing to be focused on the potential outcomes.

“For now, we don’t believe there’s going to be much in the effect in terms of fertilizer production from either country, though it would be a little silly to not consider it, so we’re watching very, very closely,” he says.

The Untold Farmer Stories Of Ukraine: Q&A With Howard Buffett

Mon, 01 Apr 2024 17:15:15 GMT

As a farmer and global philanthropist, Howard Buffett and his namesake, The Howard G. Buffett Foundation, work where others can’t or won’t to address food insecurity, mitigate conflict, combat human trafficking and improve public safety.

After 10 trips to the front line in Ukraine (the first of which was April of 2022), Buffett shared key insights and takeaways to the attendees at the 2024 Top Producer Summit.

As Ukrainians are living day-by-day and the country’s farmers face instability in inputs, destruction of their infrastructure and the threat of landmines scattered in their fields, Buffett encourages U.S. farmers to see the threat to global food security and view this conflict through the eyes of a farmer.

Q: How do you describe your experience in Ukraine?
A: “It’s hard to imagine the amount of destruction. Many farmers lost everything they’ve had. Think about if you were to go home today and your machinery shed is completely shelled, all your equipment is burned, and you don’t know when you’re going to be able to go back in the field because there are hundreds of landmines.”

Q: How has the timing of this war affected global food security?
A: “If we didn’t have the largest corn crop we’ve ever harvested, a five-year high carryover in corn and a four-year high carryover in soybeans, and if South America didn’t have strong yields, the impact of Ukraine would be so much greater than it has been. The timing is such that we’ve avoided a serious crisis around the world with food insecurity so far, but that doesn’t mean it will stay that way.”

Q: How have you seen the support from the U.S. government show up in Ukraine?
A: “We have spent a majority of the money for Ukraine in this country in 31 states, 71 cities and 130 some production lines. We’re emptying out warehouses of ammunition that if we went to war with, we’d be surprised or disappointed with, and we’d be in trouble. I’ve been in a howitzer site, where 40% of the 155 shells firing came from the U.S. misfire, either because the ammunition is old or the electronics are corroded. We’re also replacing very old weapons systems with higher tech weapons systems, so we as the U.S. will be better prepared to fight if we have to fight.”

Q: How is the way this war is being fought different?
A: “Drones are the most important thing right now in this war. Ukraine is lacking air superiority, and that’s been a huge deficit for them and has caused a lot of casualties. The U.S. would not understand how critical drones are today if it weren’t for Ukraine. And I don’t think we’re just learning from a military standpoint; if you look at the resiliency and the commitment and the courage of Ukrainians, they’re teaching us something. After two years of the fight, sometimes you forget how it all started. This is Russia, who’s one of our biggest enemies. They would destroy America tomorrow if they could; they would take away your farm tomorrow if they could; they would take away our freedom and our democracy. They are our enemy, period.”

Q: What is the effort and timing of rebuilding?
A: “I have seen hundreds of villages in rural Ukraine that are completely leveled — there’s nothing left, there’s no families, no one can live there. They’re all mined, and you can’t even go into them. I learned a lesson in Afghanistan, seeing buildings get rebuilt, roads rebuilt in the middle of war. A Navy Seal told me, if you don’t rebuild while the war is still going on, people have no hope. If people cannot see to the future, if they cannot have any faith things are going to change, and they’re going to get better, they give up, and it gets hard to go on. So, in Ukraine, we are building schools, and we’re building police stations.”

Q: What do farmers need?
A: “As part of the Victory Harvest program, we have sent 74 combines, 84 tractors, drills and auger wagons. And so now we’ve helped get 260,000 acres of crops harvested and close to 160,000 acres planted. Some of you guys have had your own experiences with fertilizer shortages, but these farmers don’t get to buy fertilizer or walk into a bank and get an operating loan.”

There are a few groups Buffett recommends to farmers wanting to help other farmers. Farmerhood was started by a Ukrainian woman whose husband was fighting on the front line. Others include Save Ukraine and Super Humans .

Q: How can agricultural equipment be used for de-mining?
A: “There are hundreds of thousands of acres to de-mine. There are still farmers dying every week because of land mines. Our new project is to take what we know about equipment and apply it to de-mining with both verification and clearance. We’ve got about 11 acres and four bulldozers and four tractors dedicated to our testing — focused on using what we have and using GPS to map where we’ve run and verified where there are mines or not. The idea right now is to take a tracked John Deere 8360R, put a LaForge three point on it and build a protection plate with two rollers in the front and a big roller behind us. We are going to bring efficiency, safety and speed to this by taking technology and applying it in a completely different way.”

Q: What about the grain successfully grown and harvested in Ukraine?
A: “Of the wheat harvested in Ukraine this year, 28% of the crop is from occupied territories, which means Russia stole it. We’re putting out fires trying to figure out how to move grain out of the country. We’ve bought thousands of Ag Bags and are buying more. And we’re working toward structuring something to make it easier for Ukrainian farmers to move grain — but it’s not simple.”

Q: What are the consequences to U.S. agriculture if Russia wins?
A: “If Russia wins, they will export all the fertilizer and the crops they can as cheaply as they can to compete with us. And then worse than that, Russia will fuel all the conflicts so they are able to maintain control of the Black Sea.”

In his latest book , Howard Buffett documents the atrocities committed against Ukrainians, as well as their suffering, resilience and courage. “Courage of a Nation” documents the first two years of war in Ukraine following Russia’s full-scale invasion in February 2022, and showcases a compilation of the thousands of images Buffett has captured over the 10 trips he has taken since the start of the war.

5 Trends To Watch In The Input Market

Thu, 29 Feb 2024 14:16:22 GMT

As fertilizer prices go through a seasonal spring elevation, experts are watching global dynamics to understand the market’s longer-term outlook in the U.S.

Among their top concerns are geopolitics, weather and low supply.

Possibility of Pipelines in Russia
Before Russia began invading Ukraine, they were the top global exporter of anhydrous. But due to their pipeline’s proximity to Ukraine, production plummeted.

Sam Taylor, farm inputs analyst at Rabobank, says the high prices that resulted from the loss of this pipeline aren’t expected to make another appearance.

“We saw the worst of the market really come and go,” Taylor says. “When we look to affordability, farmers should be able to reasonably feel comfortable in investing in a lot of these fertilizers.”

Josh Linville, vice president of fertilizer at StoneX, adds prices have the potential to significantly drop as Russia works on two new pipelines, one of which could come online as early as this year. However, the new route is also within reach of Ukraine and could be a potential target.

“You have a situation where the world’s largest exporter could pop up and start exporting again. Or, maybe they don’t,” Linville says.

The Israel/Hamas Conflict Continues
Another conflict with potential to impact the market is the situation between Israel and Hamas –even though Israel isn’t necessarily an area heavy in fertilizer production.

“This is one misstep away from the entire Middle East region jumping into the mix,” Linville says. “Sometimes the indirect impacts can have a foothold in the marketplace.”

Linville says the Middle East accounts for 51% of global urea exports and even a small reduction in supply could cause a scare and make prices jump.

China’s Unpredictability
Higher prices could also result from China–a major exporter of nitrogen–who has placed new restrictions, Those new restrictions could mean 40% less exports from the country.

“Right now, we’re going ahead with the idea that the Chinese are going to restrict exports,” Linville says. “They’re going to lower that number and that’s going to help keep prices a little bit more elevated.”

Taylor shares while tight supply may be in the near term, the longer outlook may be more positive.

“We anticipate the bulk of the exports from the Chinese market are likely to come in the second half of this year, which ultimately means a semblance of tightness in the North American market and also the global markets for the first half,” Taylor says. “There is room for optimism in the second half of this year as we look forward into 2025 to potentially see some downward pricing dynamics.”

With this in mind, Linville says it’s nearly impossible to predict what China will do, and there’s a chance the restrictions could be lifted at any time.

“The government continues to step in, play a bigger role and have a heavier hand on what happens and what doesn’t happen,” he says. “We’re watching very closely. Are they going to further restrict exports? Are they going to loosen up a little bit? We don’t know.”

The Weather Forecast
Domestically, water levels continue to be top of mind.

“The Mississippi River is an artery for our transit. When it suffers, we suffer,” Linville explains. “This is the most liquid point of fertilizer trade in the North American marketplace.

Linville says that while the Mississippi is in good shape for now, the Northern Plains have the potential to slow down the water flow due to the below-average level of snowfall they’ve received this year.

High Levels of Fall Fertilizer Applications
U.S. fertilizer applications from fall 2023 are also expected have a lasting effect on spring supply, and according to Linville, the short turnaround time between fall and spring fertilizer applications makes it difficult to restock an adequate amount of inventory.

“When we look at anhydrous, it was the third best application we’ve seen since 2000. Inventories have been drawn down very low,” he says. “You get about 90 days for the system to rebuild. There is not enough pipeline capacity, rail capacity, truck capacity or barge capacity to get the system rebuilt.”

Until inventory is rebuilt, elevated spring prices for anhydrous, phosphate and potash can be expected.

“High prices are the manufacturer’s way of saying ‘I can’t meet demand, and I am trying to shock you and scare you into using urea, UAN or something else because I can’t balance yesterday,’” Linville says.

Taylor adds while tightness in the input market isn’t quick to correct itself, next year could bring better availability.

“The current market environment still incentivizes imports into the North American market,” he says. “There should be room for inventory to build up into 2025.”

Ukraine-Russia Tensions: What it Could Mean for Agriculture

Tue, 25 Jul 2023 17:32:16 GMT

The political tensions between Ukraine and Russia continue to mount. Russia has placed 100,000 troops on Ukraine’s borders, and the Pentagon ordered 8,500 troops on higher alert Monday to potentially deploy to Europe as part of a NATO “response force” amid growing concern that Russia could soon make a military move on Ukraine.

Ukraine is a key player in global agriculture, and how these conflicts play out will have international impacts. Ukraine has more than 41.5 million hectares (or 102.5 million acres) of agricultural land that cover 70% of the country.

In 2020, Ukraine’s agriculture sector generated approximately 9.3% of GDP. Crop farming, which accounts for 73% of agricultural output, dominates Ukrainian agriculture, according to the International Trade Administration .

The country’s main crops are sunflowers, corn, soybeans, wheat and barley. Globally, Ukraine ranks:

1st in global sunflower production (For 2021/22 Ukraine sunflower seed production is estimated at a record 17.5 MMT)
6th in global corn production. (For 2021/22 Ukraine corn production is estimated at a record 42 MMT)
6th in global barley production
7th in global rapeseed production
9th in global soybean production
9th in global wheat production

See what crops are produced where in Ukraine:

Ukraine has been a global supplier of wheat, corn and sunflower/sunoil, says Joseph W. Glauber, senior research fellow for the markets, trade and institutions division at the International Food Policy Research Institute.

This year, Ukraine is forecast to account for 12% of global wheat exports, 16% for corn, 18% for barley and 19% for rapeseed. The share of agriculture in export revenues for Ukraine increased from 26% in 2012 to 45% in 2020 amounting to $22.2 billion.

Most of the wheat gets shipped in the fall though they still export a little bit in the early winter, according to the Trade Data Monitor.

Corn exports start in the late fall after harvest and continues throughout the first half of the year.

Sunflowerseed oil is shipped most year-round though there is a little seasonal downturn in late summer as stocks of oilseeds are depleted awaiting the new harvest, Glauber says. In the mid-2000s, after implementation of export tariffs for unprocessed sunflower seed, Ukraine developed a leading sunflower oil industry and became the No. 1 exporter of sunflower oil in the world.

“So, any disruptions in trade would likely be more felt for corn and sunflowerseed oil than wheat, Glauber says. “Obviously, there would be major concerns if spring plantings were disrupted.”

Read More

Markets React As Tension Mounts Between Russia and Ukraine

AgriTalk’s Davis Michaelson hosted Vince Malanga, president of LaSalle Economics, on Tuesday, Jan. 25, to dive into the current events and potential market impacts.

What's the Biggest Threat to Global Grain Supplies? It's Actually Russia's Exports, Not Ukraine

Tue, 25 Jul 2023 14:58:19 GMT

Russia continues to ramp up attacks on Ukrainian ports on the River Danube. Local officials say more than 60,000 metric tons of grain have been destroyed in the past week while also crippling grain storage infrastructure.

Grain prices continue to rally in the U.S., with wheat futures closing limit up on Monday. That opened the door for expanding trading limits on Tuesday. However, agricultural economists and markets analysts point out the situation still hasn’t reached a worst-case scenario yet.

Since Russia put a halt to the UN brokered grain deal last week, the Danube is a key export route, and the grain facilities under attack are located across the river from Romania, a NATO member.

According to John Payne, after Russia targeted Odesa over the weekend, there’s one last port in Ukraine currently open, which is Izmail. He says the port is located extremely west, almost in Romania. Payne says Russia also targeted Izmail over the weekend, but to a lesser degree with grain continuing to move from that location.

“This represents close to 25% of what they are able to export,” says Payne of hEDGEpoint Global Markets. “Fifty percent goes out of Odesa, which is now closed. The last 25% leaves over land, but keep in mind the countries around Ukraine don’t want this supply because it will hurt their own farmers.”

Not only are ports being targeted, but Russia’s defense ministry said last week Russia would deem all ships traveling to Ukrainian ports to be potential carriers of military cargo. The escalation could cause shipping insurance rates to climb, another threat to moving grain out of Ukraine.

“The problem is shipping,” says Payne. Insurance companies are not going to insure vessels in the Black Sea anymore after Putin said they could be fired upon. That leaves the friendly ports in the West Black Sea, often called CVB (Contstana, Varga, Bugas). They are going to try and rail grain there, but it’s hard to get it there and expensive.”

What’s the Worst-Case Scenario for Black Sea Grain Supplies?

So, what would be worst case? The July Ag Economists’ Monthly Monitor , a survey of nearly 60 ag economists from across the U.S., recently asked economists to share their views on what are some potential factors that could shape agriculture over the next 12 months but aren’t currently being discussed or highlighted enough. The survey was completed just days before Russia pulled out of the grain deal, but one economist was already concerned about an escalation.

“The current assumption is that the Ukraine grain initiative will stop, but that Ukraine will work with Turkey and the UN to continue shipments,” said the ag economist in the anonymous survey. “What happens if Russia strikes a ship, but then Ukraine strikes back by hitting an outbound ship carrying Russian wheat or crude oil? Maybe a low risk, but massive implications for the commodity markets if commodities coming out of Russia slow or halt. And two, what if an ‘accidental’ war breaks out between U.S. and China in the South China Sea, bringing a halt to commodity trade with China?”

The concern may seem extreme, but after the escalation over the past week, it seems to be a possibility. This past weekend on U.S. Farm Report, Payne said when you look at the global balance sheets, the loss of the Ukraine crop, at least the export terminals, isn’t a huge deal. He says what could be a huge deal is a lack of any commercial shipments in the Black Sea.

“The biggest question in all of this is what happens to Russia shipments,” says Payne. “Russians feed a lot of the poorer countries as well as float a lot of oil from the ports in the Black Sea. Our worry is what happens if those stop? All of the sudden the hungry of the world will come for U.S., EU and South American supply. Thankfully, the Brazilians have it now, but prices need to keep going to incentivize supply growth.”

Russia’s Grain Supply

Payne says the following Bloomberg charts show Russia’s weekly grain exports compared to Ukraine’s weekly exports. Ukraine’s grain exports tanked once Russia invaded Ukraine, increased after the grain deal was brokered, but then have seen another sharp decline since May. That compares to Russia where grain exports reached record levels in July before seeing a sharp drop.

DuWayne Bosse, of Bolt Marketing out of South Dakota, says the trade talk overnight Tuesday was that barges are still being loaded at Ukrainian ports despite the recent attacks. He says there’s also talk that Ukraine may attack Russia’s Kerch Bridge, which is the passageway for nearly half of Russia’s wheat exports.

The potential strike to Russia’s exports is one that Chip Nellinger, Blue Reef Agri-Marketing, also discussed on U.S. Farm Report this weekend. He says the commodity markets already knew there would be a massive drop in Ukraine’s production this year compared to a year ago.

“In my mind, it’s more about Russia, and they supposedly have a big crop,” says Nellinger. “That Black Sea grain corridor probably benefited Russia as much as much as it did Ukraine. And now if that’s going to really slow, and there’s been talk that Russia is going to keep some of that wheat off the market for an internal supply reserve, so to speak.”

Nellinger says bigger picture, the question is if Russia will continue to supply the world now that the Black Sea is closed, and he says India and China have been big benefactors of Russia’s grain.

Ag economists were also asked to provide their thoughts on the top three factors that could impact trade relations between the U.S. and China. Several economists responded that one of the biggest factors will be China’s support for Russia.

Ag Economists Turn More Positive Longer-Term On the Farm Economy

Thu, 20 Jul 2023 20:01:20 GMT

The July Ag Economists’ Monthly Monitor shows weather extremes and wild swings in the commodity markets are the two biggest factors impacting short-term outlooks, but the economists surveyed expressed a more favorable view longer-term. The latest survey also shows the biggest wildcard for agriculture over the next year could be geopolitical risks tied to China and the war in Ukraine.

This is the second survey of the Ag Economists’ Monthly Monitor , a joint effort between the University of Missouri and Farm Journal. The first-of-its-kind survey collects insights from ag economists across the U.S. Nearly 60 economists are asked each month to provide their forecasts and views. They represent a wide geography with expertise in grains, livestock and policy.

This month’s survey showed several key changes from June. Economists say they believe USDA’s current corn and soybean yield projections are still too high, and they anticipate a drop in forecasted corn and soybean prices. The economists in the July survey also predict cattle and hog prices could continue to climb higher this year.

“To me, the biggest thing that sticks out in the July survey is the more positive view 12 months into the future relative to where we were in June,” says Scott Brown, University of Missouri agricultural economist who helps author the survey each month. “In the very short run, the economists are a little less positive than where they were in June. I think that has a lot to do with the weather and general market moves we’ve seen over the last few weeks.”

The longer-term optimism revealed in the survey is despite economists’ expectations for two consecutive years of declining net farm income, falling short of the record set in 2022. The July Monthly Monitor forecasts net farm income to fall to $132.8 billion in 2023, which is below the $134.7 billion in the June survey and USDA’s current net farm income estimate of $136.9 billion. That’s still a big drop from 2022, when USDA says net farm income reached $162.7 billion.

This month’s survey also tried to peel back the layers of what commodities might be aiding the more positive long-term outlook versus weighing on the overall health of the ag economy in the short-term.

“On the crop side, it’s positive to very positive,” Brown says. “There are a few in the negative category, but a majority of economists responded the crops side of the equation looks positive. Whereas, on the livestock side, we have more negatives than we have positives.”

Economists say there are several positive developments that could shape U.S. agriculture, such as continued productivity and efficiency gains; a healthy farm economy and balance sheets; projected shifts in interest rates; new and expanded opportunities for renewable fuels; and the strength of the U.S. cattle market and meat exports as a whole. Geopolitical issues could also impact global crop production and, in turn, bring some demand back to the U.S.

Cuts to Projected U.S. Crop Yields

The survey was sent to ag economists the day after USDA released its most recent yield forecast in the July WASDE report. In what was called a rare move early in the growing season, USDA cut its corn yield forecast by 2.2% to 177.5 bu. per acre, down from 181.5 bu. per acre in the June report. The July Ag Economists’ Monthly Monitor is nearly 3 bu. per acre lower than USDA, with the group of ag economists projecting a yield of 174.9 bu. per acre.

“For me, the interesting piece of this story is there’s a lot of variability in the responses from those being surveyed, which highlights how varied the weather has been as you move around the country,” Brown says. “We had yield estimates slightly below 170 bu. per acre on the low end and some above 180 bu. per acre on the high end.”

Brown says the soybean estimate also came in lower than both USDA’s July WASDE report and the June Ag Economists’ Monthly Monitor survey. USDA estimates soybean yield at 52 bu. per acre, and the average ag economists’ estimate is 50.6 bu. per acre, a 0.5 bu. cut from the June survey.

“There was a little less variability from top to bottom on those yields, but when you look at prices, even with what was a lower corn yield, their estimate of 2023/2024 corn prices went from $4.99 in June to $4.80 in the July survey,” Brown says.

What Economists are Watching the Next Six Months for Crop Prices

When asked what factors will impact crop prices in the next six months, economists said:

Final yields
Export demand and competition
Weather domestically and abroad
Geopolitical risk in the Black Sea and China, including developments that impact ag exports in Ukraine/Russia

“I think a couple of things stick out beyond the weather discussion, and one is export demand as well as global competition, such as what’s going to happen with South America in terms of competing with U.S. corn and soybean markets.

“The economists certainly continue to talk about the geopolitical risk in the Black Sea and China, in particular, and what that means for our ability to export corn and soybeans as we look ahead,” Brown says. “Those are really the two big ones that came out of this survey.”

What Livestock Economists Are Watching the Next 6 Months for Livestock

Ag economists think the following factors will impact prices the next six months:

Changes in feed costs and impact of corn prices
Rising milk prices
Consumer meat demand and influences from macroeconomic factors, both domestically and abroad
Placements of cattle on feed

Brown says while the majority of economists are concerned about feed costs and the impact on livestock producers, the second-biggest concern revealed in the survey is demand. Economists pointed to both domestic and international demand as possible problem areas.

“2021 and 2022 were extremely positive from a demand standpoint, and we seem to be backing up a little bit in 2023,” Brown says.

Economists More Bullish on Cattle and Hogs

The July Ag Economists’ Monthly Monitor shows economists are more positive when asked about cattle and hog prices, but they have a more negative view on dairy, which they consider the biggest weight in the livestock sector.

“When you look at where pork prices have gone over the last month, it’s gotten more positive. Now, I don’t want to suggest we’re back in black ink, but we have seen recovery in things like the pork cutout value,” Brown says. “The economists continue to worry about how the general economy will affect livestock going forward, but overall, it seems we’re seeing a more positive view from the livestock perspective in this month’s survey.”

Based on the July monitor, economists expect average milk prices to fall back to 2021 levels, but production costs will continue to be higher in 2023 versus 2021.

“No. 1, the economists continue to worry about feed costs,” Brown says. “We continue to see fairly high feed costs affecting profitability. So even in the case of beef cattle, where we’re talking record cattle prices, we’re not talking record profitability because of the feed cost side.”

Longer-Term Look at the Health of Agriculture

Over the next 12 months, there are several things that could shape the health of the ag economy, according to the July survey:

Crop prices and production costs, including inputs, rental rates, land values and supply chain disruptions
Subsequent impact on producer margins and the protein sector from rising interest rates and inflationary pressure
Weather considerations, including drought conditions in the short run and yield impacts in longer run
Geopolitical tensions and competitiveness of U.S. ag exports
Changes in consumer demand domestically and abroad, new markets for agricultural products, including biofuels

“One thing that came pretty strongly out of the survey is the continued increases in productivity in agriculture, which makes us more efficient,” Brown says. “The farm economy is generally healthy, and when you look at balance sheets, they are still really, really strong in many cases. That’s despite a lot of the issues we’ve talked about.”

In the July survey, economists voiced more concerns about interest rates and the impact on operating loans. One economist also mentioned the industry might be underestimating the negative impact Proposition 12 could have on the entire livestock industry.

The Turbulent Relationship Between the U.S. and China

While none of the ag economists surveyed think the U.S. will enter into a trade war with China in 2023, economists continue to remain cautious about China, which could have a direct impact on U.S. agriculture.

When asked to list the top factors shaping trade relations between the U.S. and China, economists said:

POTUS and political polarization in the U.S.
Non‐agricultural geopolitical tensions, including national security concerns, support of Taiwan and limits on technological production
Changes in China’s economic growth, including population and demographics
Russia’s invasion of Ukraine and Russia’s relationship with China
Quality, price and availability of U.S. products compared with global competitors

Potential Events/Factors Not Getting Enough Attention Today

The July survey also asked economists to outline any factors or events that currently aren’t receiving enough attention but could shape agriculture over the next 12 months. One economist brought up impacts of geopolitical risks and fallout from the war in Ukraine, but also a potential war between the U.S. and China.

Other potential events that could cause a major shakeup in agriculture include:

Weather events, domestically and abroad, warranting a broader conversation on climate
Potential for a significant recession in China
Focus on renewable diesel obscuring importance of RFS in overall biofuel use
Workforce concerns for producing, processing and transporting agricultural products domestically and abroad
Declining EU pork production and commerce implications of Proposition 12
Strikes at shipping ports in Vancouver and potential for upward pressure on potash prices with reduced production capacity at Nutrien mines in Saskatchewan

Previous Ag Economists’ Monthly Monitor Coverage

Most Ag Economists Think It’s Unlikely the 2023 Farm Bill Will Be Written in 2023

High Production Costs Could Weigh on the Ag Economy Through 2024, New Survey of Economists Finds

Global Grain Shuffle: Is The End Of U.S. Grain Export Dominance Near?

Thu, 20 Jul 2023 18:45:25 GMT

It didn’t start with the swing of an ax in the Amazon or by an explosion in Kiev. While both of those contributed, the shift happening in global grain flows is a multifaceted prism through which the picture of the future of grain delivery is continuing to evolve.

“This year, Brazil could take the crown of being the world’s largest corn exporter,” said Dan Basse, president of AgResource Company . “It took that crown for soybeans back in 2017.”

Global Acre Increase

This feat was set in motion by the U.S. drought in 2012 as higher prices encouraged more acres and pushed buyers to seek alternative supplies. While Ukraine has helped to fill some of that demand, the ongoing war and consequential infrastructure damage will make it hard for Ukraine to reclaim former volumes for some time.

“Ukraine, no matter what happens with the war from here forward, optimistically we’ll probably see corn and sunflower production 40% to 50% below normal,” Basse says. “The corn crop will probably be in the range of 18 million metric tons (MMT) or 20 MMT.”
Of course, that’s only possible if the negotiated shipping corridor remains open and transport vessels are willing to haul grain to its destination.

“It’s exceedingly unlikely Russia will pull out of this agreement simply because their allies, China, India and Iran, have a strong interest in keeping feed grains flowing,” says Matt Roberts, senior grain analyst with Terrain .

All Eyes on Wheat

As Ukraine’s production sputters amid war, labor shortages, high fertilizer prices and diesel near $30 per gallon, other countries will help make up the shortfall. Wheat will come from the EU, Argentina, the U.S. and Russia.

“The Russian wheat crop is a record over 100 MMT, and they’ll be exporting wheat at a cheaper price than us,” says Steve Freed, vice president of grain research at ADM Investor Services .

“If Russia has a crop problem, there will be a story in the world wheat market,” Basse adds.

Expanding acreage beyond U.S. borders, Freed and Basse agree, will continue to drive up supplies and drive down U.S. export demand.

“We think Russia could easily add 18 million acres for next year and Brazil could also add 18 million acres next year and not really affect the Amazon,” Freed says. “While environmentalists in Washington wants to add 3 to 4 million acres to the CRP.”

Soybean Spotlight

The juxtaposition of potential acreage contraction leveled against a new demand driver in renewable diesel and sustainable aviation fuel has expanding crush plants searching for more soybean acres, not less.

“The Renewable Volume Obligation (RVO) RVO came down from EPA in December and so we now think we’ll need somewhere between 14 million or 15 million additional soybean acres by 2026,” Basse says. “As we look at the last half of the year, we think soybean oil will make new all-time highs.”

As soybean oil prices and demand drives higher, Basse expects it to impact planting decisions in 2024. The result will be a burgeoning domestic market for soybeans and big exportable supplies of soybean meal.

“As renewable diesel comes online, our share in world soybean trade is declining,” Basse says. “This year, our share is only about 11% and when I first got in this business 44 years ago it was 64%.”

Freed agrees, expecting the trend to be lower U.S. grain exports due to a record crop in Brazil. That big potential matches the big demand from the world’s No. 1 soybean buyer, China. Roberts says we’ll still sell China soybeans, it will just come in the form of livestock protein.

“As China, India, Indonesia and other developing countries become wealthier it’s not just about eating more,” said Roberts. “It’s about eating better and that means moving up to better cuts of meat and animal protein.”

These analysts predict, the only constant in today’s global grain flow picture is change.

“The 2022 rally was all about lower supplies,” Freed says. “2023 is going to be about lower demand as prices try to compete with the fact that all these other origins are now cheaper than us.”

Moscow Halts Grain Deal After Bridge to Crimea Struck

Mon, 17 Jul 2023 15:36:18 GMT

Russia halted participation on Monday in the year-old U.N.-brokered deal that lets Ukraine export grain through the Black Sea, just hours after a blast knocked out Russia’s bridge to Crimea in what Moscow called a strike by Ukrainian sea drones.

Russia said two civilians were killed and their daughter wounded in what Moscow cast as a terrorist attack on the road bridge, a major artery for Russian troops fighting in Ukraine.

The Kremlin said there was no link between the attack and its decision to suspend the grain deal, over what it called a failure to meet its demands to implement a parallel agreement easing rules for its own food and fertilizer exports.

“In fact, the Black Sea agreements ceased to be valid today,” Kremlin spokesman Dmitry Peskov told reporters on a conference call. “Unfortunately, the part of these Black Sea agreements concerning Russia has not been implemented so far, so its effect is terminated.”

Turkish President Tayyip Erdogan, the grain deal’s sponsor, said he still believed Putin wanted it to continue. The Russian and Turkish foreign ministers would talk later on Monday, he told reporters.

“I hope that with this discussion, we can make some progress and continue on our way without a pause,” Erdogan said.

Russia’s foreign ministry said it would consider rejoining the grain deal if it saw “concrete results” on its demands.

The blast on the road bridge to Crimea could have a direct impact on Moscow’s ability to supply its troops in southern Ukraine, and reveals the vulnerability of Russia’s own Black Sea infrastructure to devices such as seaborne drones: small, fast remote-controlled boats packed with explosives.

Images showed a section of the road bridge had come down and traffic was halted in both directions, although a parallel railway bridge was still operational. Blasts were reported before dawn on the 19-km (12-mile) bridge, which Russian President Vladimir Putin ordered built after seizing and annexing the peninsula from Ukraine in 2014.

Kyiv gave no official account of the blasts but Ukrainian media quoted unidentified officials as saying Ukraine’s Security Service was behind it. Ukraine has long maintained that the bridge was built illegally, and its use by Russia for military supplies makes it a legitimate target. It was last hit by a massive explosion and fire in October.

Russia’s suspension of the Black Sea grain deal could drive up food prices across the globe, especially in the poorest countries. Ukraine and Russia are both among the world’s biggest exporters of grain and other foodstuffs.

The grain deal was hailed as preventing a global food emergency when it was brokered by the United Nations and Turkey last year, halting a de facto blockade of Ukrainian ports by Russia, which agreed to let ships pass after inspections in Turkey.

Global commodity food prices rose on Monday, though the increase was limited, suggesting traders did not yet anticipate a severe supply crisis. The Chicago Board of Trade’s most active wheat Wv1 contract was up 3.0% at $6.81-3/4 a bushel at 1056 GMT after earlier rising over 4%.

Putin had threatened last week to walk out of the grain deal, while also saying Russia could return to it if its demands were met.

“We can suspend our participation in the deal, and if everyone once again says that all the promises made to us will be fulfilled, then let them fulfil this promise. We will immediately rejoin this deal,” Putin said last week.

Western countries say Russia is trying to use its leverage over the grain deal to weaken financial sanctions, which do not apply to Russia’s agricultural exports.

European Commission President Ursula von der Leyen described Russia’s suspension of the agreement as a “cynical move” and said the EU would continue to try to secure food for poor countries.

WITHOUT RUSSIA?

Russia has agreed three times in the past year to extend the Black Sea deal, despite repeatedly threatening to walk out. It suspended participation after an attack on its fleet by seaborne Ukrainian drones in October, leading to a few days when Ukraine, Turkey and the United Nations kept exports going under the deal without Moscow.

Denys Marchuk, deputy head of the Ukrainian Agrarian Council, the main agribusiness organisation in Ukraine, said seaborne exports could proceed again without Russian agreement.

“If there will be safety guarantees from our partners, then why not conduct the grain initiative without Russia’s participation?” he told Reuters.

Any such resumption of Ukrainian sea exports without Russia’s blessing would probably depend on insurers. Industry sources told Reuters they were studying whether to freeze their coverage.

“Some underwriters will look to take advantage with a hefty increase in rates. Others will stop offering cover. The (key) question is whether Russia mines the area which would effectively cease any form of cover being offered,” one insurance industry source said.

The latest blast on Russia’s bridge to Crimea follows months of Ukrainian strikes on Russian supply lines as Kyiv pursues a counteroffensive to drive Russian forces out of its territory.

Unverified imagery showed a section of road on the bridge had split and was listing to one side, with metal barriers buckled. Dash cam footage showed drivers braking sharply shortly after the incident.

Russian officials said a Russian Su-25 fighter-bomber crashed into the Sea of Azov on Monday, but the pilot ejected successfully and there was no indication of an attack. The bridge to Crimea spans the mouth of the sea.

The Ukrainian counteroffensive, which began last month, has so far been slow going, capturing a string of small hamlets in the south and some territory around Bakhmut, the small eastern city Russia captured in May after the war’s deadliest combat. Kyiv said on Monday its forces had captured another 18 sq km of territory over the past week, bringing the total captured to more than 210 sq km.

(Reporting by Lidia Kelly in Melbourne, Guy Faulconbridge in Moscow, Max Hunder in Kyiv and Reuters bureau; Writing by Peter Graff; Editing by Philippa Fletcher)

What Could the Ukraine Dam Explosion Mean for Global Ag Markets?

Thu, 08 Jun 2023 18:34:45 GMT

Farmers in Ukraine are assessing the damage after major dam explosion in the southeastern part of the country, which has been occupied by Russia.

The critical Nova Kakhovka dam and hydroelectric power station sits on the Dnipro River. Ukraine accused Russian forces of blowing up the dam while Russian officials blame Ukrainian bombardment for it in the contested area.

According to the Ukrainian military, the incident occurred on Tuesday, June 6 at 2:50 a.m. local time (which is Monday, June 4 at 7:50 p.m, eastern time.)

Its destruction raised anxiety about potential disruption to global grain supplies pushing up some prices around the world. For example, wheat prices surged at one point up 3%.

“During the course of the evening and night when that news came out the market was up sharply. But as the day wore on, we’ve slipped back into negative territory,” says Chuck Shelby, Risk Management Commodities. “It just seems that this war continues to go on, and the market makes a reaction but doesn’t know what to make of it. World buyers have not been showing up as we would like to see.”

There are massive agricultural fields in the southern part of Ukraine where that dam burst. The collapse as endangered crops and the country’s breadbasket and threatened drinking water supplies with officials also warning of a looming environmental disaster pointing to oil escaping from the dam machinery and significant flooding.

This comes amid word that Ukraine’s ag output is expected to decline by 36% this year, compared to 2021. The estimated costs for the eventual reconstruction of Ukraine’s agricultural sector has now reached around $411 billion.

“In the long run, I do believe, though, that the production out of Ukraine as this war intensifies during the summer is certainly not going to be what it was,” Shelby says. “And how much grain gets exported out of country is going to continue to decline.”

BREAKING: Black Sea Grain Deal Extended for Two Months

Wed, 17 May 2023 17:35:53 GMT

The Ukraine Black Sea grain deal has been extended for two more months, Turkish President Tayyip Erdogan said on Wednesday, one day before Russia could have quit the pact over obstacles to its grain and fertilizer exports.

The flow of ships through the corridor had been grinding to a halt during the last few days with the deal apparently set to expire on Thursday.

Earlier on Wednesday, the last remaining ship registered to travel through the corridor had left a Ukrainian port. U.N. data showed the DSM Capella had left the Ukrainian port of Chornomorsk carrying 30,000 tonnes of corn and was on its way to Turkey.

“The Black Sea grain corridor deal has been extended by two months with the efforts of Turkey,” Erdogan said in a televised speech, also thanking the Russian and Ukrainian leaders and U.N. Secretary-General Antonio Guterres for their help.

A spokeswoman for Russia’s Foreign Ministry said they would be commenting later on the reported extension.

The United Nations and Turkey brokered the Black Sea deal for an initial 120 days in July last year to help tackle a global food crisis that has been aggravated by Moscow’s invasion of Ukraine, one of the world’s leading grain exporters.

Moscow agreed to extend the Black Sea pact for a further 120 days in November, but then in March it agreed to a 60-day extension - until May 18 - unless a list of demands regarding its own agricultural exports was met.

Open Questions

To convince Russia in July to allow Black Sea grain exports, the United Nations agreed at the same time to help Moscow with its own agricultural shipments for three years.

“There are still a lot of open questions regarding our part of the deal. Now a decision will have to be taken,” Kremlin spokesman Dmitry Peskov told reporters on Tuesday.

Asked on Wednesday about how the talks were progressing, Peskov told a briefing he would not enter into “hypothetical discussions” on what Russia would do if the grain deal lapsed.

Senior officials from Russia, Ukraine, Turkey and the U.N. met in Istanbul last week to discuss the Black Sea pact.

Turkish Foreign Minister Mevlut Cavusoglu said last week he thought the deal could be extended for at least two more months.

While Russian exports of food and fertiliser are not subject to Western sanctions imposed following the February 2022 invasion of Ukraine, Moscow says restrictions on payments, logistics and insurance have amounted to a barrier to shipments.

The United States has rejected Russia’s complaints. U.S. Ambassador to the U.N. Linda Thomas-Greenfield said last week: “It is exporting grain and fertilizer at the same levels, if not higher, than before the full scale invasion.”

Officials from Russia, Ukraine, Turkey and the U.N. make up a Joint Coordination Centre (JCC) in Istanbul, which implements the Black Sea export deal. They authorise and inspect ships. No new vessels have been authorised by the JCC since May 4.

Authorised ships are inspected by JCC officials near Turkey before travelling to a Ukrainian Black Sea port via a maritime humanitarian corridor to collect their cargo and return to Turkish waters for a final inspection.

In an excerpt of a letter seen by Reuters last month, Russia told its JCC counterparts that it would not approve any new vessels to take part in the Black Sea deal unless the transits would be done by May 18 - “the expected date of ... closure”.

It said this was “to avoid commercial losses and prevent possible safety risks” after May 18.

Some 30.3 million tonnes of grain and foodstuffs have been exported from Ukraine under the Black Sea deal, including 625,000 tonnes in World Food Programme vessels for aid operations in Afghanistan, Ethiopia, Kenya, Somalia, and Yemen.

(Additional reporting by David Ljunggren and Nigel Hunt; Writing by Michelle Nichols and Gareth Jones; Editing by Daren Butler, Mark Potter and Alison Williams)

Kansas Winter Wheat Crop Crippled by Drought that Covers 80% of the State

Tue, 18 Apr 2023 17:24:35 GMT

The drought situation across much of the Plains hasn’t improved this year; instead, the latest U.S. Drought Monitor shows it’s growing worse. Now, farmers across a state that typically accounts for 25% of the total winter wheat production in the U.S. are staring at a bleak picture for crop prospects this year.

Doug Keesling farms near Lyons, Kan. He would typically be planting spring crops in April, but because it’s so dry, he’s playing the waiting game and needing a little moisture before he plants.

The latest U.S. Drought Monitor released on Thursday shows 43% of the state is seeing the most severe level of drought. While some parts of the state are seeing the intense drought conditions, the dryness is extremely variable across the state.

“It’s amazing. If you go 30 miles east of me, it’s wetter than it is here. But if you go from here towards southwest Kansas, it’s as dry here as it is there, which is not what we’re used to,” says Keesling. “It’s been dry like this for almost a year.”

He says the variation in winter wheat crop conditions across even his own county is proof about how variable drought conditions are across the state.

“There was a lot of wheat that went in after fall crops, like after corn or soybeans, that did not germinate until later in the winter, because it was so dry,” he says. “Matter of fact, we had some wheat, that in severe cases, did not germinate until January or February when there was a light snow.”

USDA’s Crop Progress released on Monday showed 61% of the Kansas wheat crop is rated as being in poor to very poor condition.

For the week ending April 9, 2023, there were 6.6 days suitable for fieldwork, according to @USDA_NASS. Winter wheat condition rated 33% very poor, 28% poor, 26% fair, 12% good, and 1% excellent. Winter wheat jointed was 17%, near 19% last year and 20% for the five year average. pic.twitter.com/T2ZezFNiIY
— KansasWheat (@KansasWheat) April 10, 2023

Kansas Wheat says farmers across much of the state are worried about their wheat crop.

“Wheat is a pretty resilient crop, so it can hold on in some dry conditions. But especially as you get closer to southwest Kansas, a lot of it just didn’t emerge in the fall,” says Marsha Boswell, vice president of communications for Kansas Wheat. “Coming out of dormancy, it needs some moisture to start growing again, and it’s just not receiving any of the moisture that it needs.”

Back-to-Back Years of Drought

Boswell says while many farmers struggled through dry conditions last year, it’s the back-to-back years of dry weather that have been such a sharp blow to crops.

“Last year we were in a long-term drought, but what the difference is from last year is that subsoil moisture now is completely depleted. So last year in the drought, the wheat could pull from some of that subsoil moisture and go ahead and make a plant. It hasn’t been replenished, and there’s just no subsoil moisture there to pull from now.”

With sporadic chances of rain this weekend, many growers are holding onto hope at least some moisture will bring the crop out of such sluggish conditions. For some, it may already be too late.

“I was out and about and went to some areas in western Kansas, and I was told at that time that if they could get some moisture in the next week or two, this crop could pull out of this a little bit, but we haven’t seen that,” Boswell says.

The Wheat Quality Council will hold its annual wheat tour across Kansas in mid-May, a time when maturing wheat will give farmers and others a better estimate of the quality and quantity of this year’s crop.

“I think as we get farther to the west and up and around Colby that first night, and then that second day where we go from Colby to Wichita and through southwest Kansas, we’re really going to see some tough conditions and some abandoned fields,” Boswell says.

Snapshot of National Winter Wheat Crop Conditions

Nationally, USDA’s Crop Progress report showed only 27% of the country’s winter wheat crop is rated good to excellent.

“This is probably one of our weakest crop progress reports for conditions in 40 years,” says Ben Brown, agricultural economics Extension specialist for the University of Missouri. “I mean, this is tied with 1996 in some states, and 1996 was a pretty poor year for wheat producers.”

University of Missouri Extension economist Ben Brown says the eastern half of the country is seeing strong wheat conditions, with more farmers in states like Illinois, Ohio and Michigan potentially taking that crop to harvest instead of only using the wheat as a cover crop during the winter months.

“On the other side of the scale, I wouldn’t be surprised to see some pretty strong abandonment in places like the panhandle of Texas, Oklahoma, and southwest Kansas,” says Brown. “Just too poor of conditions. Maybe there will be the opportunity to plant another crop in there and hope for some rainfall later in the season.”

Possible High Abandonment of U.S. Winter Wheat

Keesling isn’t sure how much of his crop will need to be abandoned, as he says it’s just too early to know. Across the state, severely drought-stricken fields aren’t showing much promise, and the likelihood is growing that more winter wheat fields won’t be harvested this year.

“I think there’s no question there’s going to be some abandonment, probably higher than in a lot of years, because the wheat just isn’t up and it’s not growing,” says Boswell.

What makes that reality so hard is the current price of wheat, even if some question whether today’s prices truly reflect how bad this winter wheat crop really is.

“I think there’s an understanding that yes, we’re dealing with less room to spare here, if you will, but we’ve still got a pretty healthy global wheat picture, even with some of these challenges here in the United States. And then certainly with the continued challenges in the Black Sea Region,” says Brown. “So, understanding all those conditions, as well as kind of what’s weighing on some of this market a little bit.”

The Black Sea Wild Card

The future of the Black Sea Grain Initiative is currently very murky. The Russian ag minister says Russia won’t renew the grain deal until the West’s sanctions on Russian food and fertilizer are lifted.

According to Farm Journal Washington Correspondent Jim Wiesemeyer, senior Russian diplomat Mikhail Ulyanov commented on the situation on Friday, saying the West still has time to remove “obstacles” hindering the implementation of the Black Sea grain deal before a deadline set for May 18.

“Every time we’ve seen this kind of come around, and these flares that it doesn’t look like the grain deal is getting renewed, we’ve seen a 25- to 50-cent rally in the wheat market. And that’s just kind of the nature of the game right now,” says Brown.

Focus on Producing a Crop Through the Drought

As Kansas farmers work to provide the wheat needed for the rest of the world, Keesling says the reality is tough, but the drought hasn’t completely wiped out hope of producing at least some type of crop this year.

“Farmers, as a whole, have a lot of faith that there will be rain,” he says. “And so, I’m trying to be as optimistic as I can be even though sometimes some of these crop conditions behind us don’t always look it. We have faith that we will get rain and that something will turn around.”

What’s the Latest with the Black Sea Grain Deal?

Mon, 17 Apr 2023 17:38:19 GMT

Wheat and corn exports out of the Black Sea region are at risk again. Ukrainian officials say Russia’s recent actions to block inspections of ships under the Black Sea grain initiative means the grain deal is facing a murky future. That’s as the area was still able to see record wheat exports over the past year, despite the war, largely thanks to the grain deal ensuring grain exports continued to flow out of the area.

According to Farm Journal Washington correspondent Jim Wiesemeyer, the situation is growing more tense. Wiesemeyer says Ukraine’s restoration ministry is now saying the Black Sea grain initiative is in danger of being shut down after Russia again blocked inspections of ships under the deal.

“For the second time in nine months of operation of the Grain Initiative, an inspection plan has not been drawn up, and not a single vessel has been inspected. This threatens the functioning of the Grain Initiative,” the restoration ministry said.

Wiesemeyer reports Russia is now saying an extension of the deal is “still not that rosy,” as it reiterated the need to improve conditions for exports of its grains and fertilizers. More in Russia/Ukraine section.

Russia Blames the West

The recent developments come as earlier this month, the Russian ag minister says Russia won’t renew the grain deal until the West’s sanctions on Russian food and fertilizer are lifted. Even senior Russian diplomat Mikhail Ulyanov commented on the situation on Friday, saying the West still has time to remove “obstacles” hindering the implementation of the Black Sea grain deal before a deadline set for May 18.

Upcoming Crop at Risk

John Phipps: If China Sides With Russia, The Move Could Cost U.S. Farmers Beyond Trade

Mon, 06 Mar 2023 23:11:10 GMT

At one year, I think it realistic to label the Ukraine War a quagmire, with no obvious end. Until recently, China , or perhaps more accurately, Xi Jinping, has been unclear on what involvement it intended.

Last week, a German newspaper reported he was considering supplying lethal weaponry, starting with dual-use weapons like drones but possibly following conventional military materiel. While the report is unconfirmed, it was credible enough the U.S. warned China of serious consequences.

Russia badly needs to replace expended and outdated Soviet arms while China needs Russian energy. That is compelling math. This is bad news not just for the heroic people of Ukraine, but Europe and the US.

Lethal weapons are a red line diplomatically and strategically. China’s massive industrial complex can easily outproduce the combined Western Alliance in sheer numbers of conventional weapons. It will become contentious political issue as Republican support for Ukraine is dropping and their admiration of strong-man dictatorships like Victor Orban of Hungary grows.

Related Story: Battle For Ukraine: The Untold Farming, People And Infrastructure Stories From The Front Lines

Meanwhile, anti-China sentiment on the right has been intense for years so that an emerging China-Russia Axis will be a pick-a-side moment. U.S. agriculture has much to lose. Grain sales are less worrisome in my opinion due to the infamous bathtub theory of commodity flows.

The almost certain stronger sanctions on Chinese trade that would follow will pressure our flexibility to reroute supply lines. Planter upgrades and combine repairs are already hobbled by ordinary steel castings and machinery tracks as we discover, often to our surprise, where stuff really comes from.

Our business with China is largely for such mundane, low profit components far more than complex technology. While I believe this would be a major geopolitical blunder for China and Russia, our economic and political systems will be tested. Our ties with partners like Japan and Europe and neighbors like Canada and Mexico will be critical.

For my money, Putin and Ukraine in 2022 have too many similarities with Hitler and Czechoslovakia in 1939. Any decision by China to ally with an invader will change Sino-American relations and commerce radically.

Battle For Ukraine: The Untold Farming, People And Infrastructure Stories From The Front Lines

Fri, 03 Mar 2023 21:50:56 GMT

Dressed in protective gear, Illinois farmer Howard G. Buffett bounced his way across frozen back roads, driving in well-worn tracks along the path to Bakhmut, near the front lines of the war in Ukraine. Even in an armored vehicle, the threats of landmines and munitions were ever present.

“In the first 30 minutes or so, as we were driving in, I started to count ambulances that were coming out,” Buffett recalls. “I lost count at 50.”

As a global philanthropist, Buffett is no stranger to war zones and political conflict. His namesake, The Howard G. Buffett (HGB) Foundation , works across the world in places others can’t or won’t to address food insecurity, mitigate conflict, combat human trafficking and improve public safety.

“If people cannot feed themselves, and they cannot feed their family and a government cannot feed people, it breeds conflict,” Buffett explains. “When Ukraine fails, in terms of their ability to produce agricultural products, the world becomes less safe.”

PRODUCTION PROBLEMS

Prior to the invasion, Ukraine was the world’s biggest exporter of sunflower oil and sunflower meal, the fourth-largest exporter of corn and the fifth-largest exporter of wheat, according to USDA. All told, Ukrainian farmers were growing about 100 million metric tons of commodities.

“Ukraine, no matter what happens with the war, will probably see corn and sunflower production 40% to 50% be-low normal,” says Dan Basse, president of AgResource Company.

Ukraine is also a major wheat producer and global exporter. USDA estimates for 2022/23 wheat production will be down about 40% from a year ago. In the eastern areas where most of the conflict is happening, output will be even lower.

Nick Gordiichuk, a farmer near Kyiv, says winter wheat acres will decrease.

“We’re not sure about the functioning of [the grain export] corridor, and weather conditions weren’t good,” he says. “Many farmers are looking at crops that are easy to plant and do not require much fertilizer.”

WAR ON AGRICULTURE

In the past year, Ukrainian farmers have learned it’s increasingly more difficult to grow, harvest and ship products abroad. From limited and high-priced inputs to a lack of labor, production problems appear to be a reality for the foreseeable future.

“A lot of farmers are fighting on the front line and die on the front line, which has a huge impact on how you continue to function in your agricultural sector,” Buffett explains. “This isn’t just a war on civilians, this is a war on agriculture.”

In 2022, the World Food Program (WFP) calculated nearly 350 million people across 80 countries were acutely food insecure. The war in Ukraine is a significant contributor to the surge in hunger and conflict.

“There’s more conflict in Africa today because there are more hungry people; the war in Ukraine has been a big contributing factor,” says Buffett, who has spent considerable time and resources in Africa.

Traditionally, Ukraine has been a major supplier of grain for WFP and many smaller, less stable countries across Africa and the Middle East. That ability has been severely impacted since the outbreak of war.

For U.S. farmers, it is hard to fathom what has happened to their counterparts in Ukraine, Buffett says.

“There are landmines on hundreds of thousands of acres,” he says. “More than $4 billion worth of commodities have been stolen; there’s infrastructure damaged and 84,000 pieces of farm equipment has been destroyed, and it’s not stopping.”

During USDA’s recent Agricultural Outlook Forum, Mykola Solskyi, Ukraine’s minister of agrarian policy and food said the country’s cultivated areas have decreased by about 25%.

“Farmers sacrifice their lives doing their job,” he says. “There are areas farmers cannot cultivate as a result of the war. A considerable amount of land is polluted with explosives.”

COMBINES IN COMBAT

Nearly every day, Buffett receives a photo of farm equipment destroyed by mortars or landmines.

“They just sent me one of a Komatsu D61 bulldozer that hit a landmine,” he says. “It blew the entire track off and blew out half the undercarriage. Thankfully the farmer was okay.”

That isn’t always the case, which is why his foundation is helping to provide detection hardware and expertise to begin the slow process of demining.

“We spent about $30 million on demining in 2022, and it’s going to go on for years,” Buffett says.

As equipment gets destroyed or stolen, sustaining agricultural production becomes nearly impossible without outside support.

“We were able to get 50 combines into Ukraine in about 30 days,” Buffett says. “The fun part of the story is that al-most all of them were originally destined for Russia.”

Roughly 8 million Ukrainians are now living as refugees in Europe and another 6 million are displaced within their own country, per WFP. At last count, 18 million Ukrainians need humanitarian help with one in three facing food insecurity.

In 2022, the HGB Foundation spent $148 million buying equipment, helping feed people, financing food boxes and providing seeds for gardens.

NEVER AGAIN

Buffett’s foundation is also providing rapid DNA testing equipment and investigative teams to do the hard work of cataloging and recording the lives lost. From bodies buried in rubble to the discovery of mass grave sites like the one found near Kharkiv, the job is endless.

“It’s a solemn experience to walk through a forest with 451 hand-dug graves,” Buffett says. “At one site the team said 70% to 80% of the bodies showed some kinds of torture, many with broken fingers or broken limbs.”

After hearing stories of elderly parents shot by snipers, Buffett knows the consequences and horrors of this war will eventually be uncovered.

“We are not learning from history,” he says. “The Holocaust was never again, and Rwanda was never again yet we are watching never again unfold in front of us.”

2023 AND BEYOND

As the conflict stretches into its second year, Ukrainian farmers are caught in the crossfire. For those who can plant, finding a buyer or processor is still a massive challenge.

A protected shipping corridor is set for renewal in mid-March but has seen a significant slowdown. Meanwhile, pushing crops east to Europe via rail comes with its own difficulties, including different track widths.

It’s why in 2023, the HGB Foundation plans to front $5 million to build new export hubs.

“They want to try to start moving grain in containers because the rail system can move lots of containers, and you can transfer them easily onto European trains,” Buffett says.

This year, Buffett says his goal is to spend $300 million in support of Ukrainian agriculture. That includes finding ways to provide lower interest rates for loans and moving equipment and inputs to areas in need.

COMPASSION VERSUS COMPETITION

In five trips to Ukraine, Buffett says the experience of seeing the people, the land and the impact of war, has cast the situation in a different light.

“I know some farmers think they’re a competitor,” Buffett says. “That’s natural. If you want to think that way, that means your neighbor is also your competitor. Yet, we don’t treat our neighbor like they’re our competitor; we treat neighbors like neighbors.”

With a global lens, Buffett has witnessed how important Ukraine is to world stability. For him, it outweighs potentially lower prices when he hauls corn to the elevator in Decatur, Ill.

“It really isn’t a head-to-head competition,” he says. “Helping Ukraine is helping the world.”

Farm Journal Editor Clinton Griffiths is a TV newsman turned magazine editor with a passion for good stories. He believes the best life lessons can be found down a dirt road.

Is Russia's Threat to Nix Black Sea Grain Deal a Potential Ploy to Push Wheat Prices Higher?

Fri, 03 Mar 2023 18:23:36 GMT

Russia is now saying it will only extend its Black Sea grain deal if sanctions are lifted on its own agricultural products. The deal, which was brokered last year, allowed for safe passage of Ukrainian ag products.

As first reported by Reuters, Moscow says payment, insurance, and other restrictions are “barriers” to exporting its products, including products such as fertilizer.

The grain deal is set to expire on March 18. Turkey and the UN helped broker the original grain deal in 2022, and with chances that Russia will not renew the deal, the news sent wheat prices higher on Thursday.

Could the threat of no grain deal turn into reality, which would hinder the flow of grain from that area? Brian Grete, editor of Pro Farmer, says it could, but he also says this isn’t a surprising move by Russia.

Related Content: One Year After Russia’s Invasion of Ukraine: How Has World Trade Realigned?

“They have record exports planned for wheat the second half of the marketing year, and so it would behoove them to talk up wheat prices if they could, just with the amount of exports going out,” says Grete. “I think this will go down to the 11th hour, the same as it did in November, and we’ll get an extension to the deal. It’s a matter of whether it’s another 120 days, or whether it’s a year as Ukraine wants. And when all said and done, though I do think the extension will be granted, and Russia will probably get a few things they’re demanding, we aren’t going to lift the sanctions from the West.”

Ukraine is asking for the new grain deal to be extended to a year. Reports currently show Ukraine exports nearly 3 million tonnes of agricultural products a month under the agreement. However, Ukraine is asking for additional ports to be added under the deal. Ukraine’s Deputy Minster for Communities, Territories and Infrastructure Development says the country could double that amount if ports in Odesa Oblast are included, and up to 8 million tonnes if Mykolaiv is added to the agreement.

Related Content: Battle For Ukraine: The Untold Farming, People And Infrastructure Stories From The Front Lines

Ukraine Farmers See Crop Production and Exports Reduced a Year After the Russian Invasion Began

Mon, 27 Feb 2023 21:03:47 GMT

Ukraine agricultural production and grain exports came to a halt when Russia invaded on Feb. 24, 2022. A year after the invasion many farmers are on the frontlines fighting while still trying to run their operations. They’re fighting for democracy, their country and to reclaim their land and the production they’ve lost.

Farming has been difficult in the middle of a war, but farmers such as Nick Gordiichuk, who lives near Kiev, have persevered. He says it took a couple of weeks to clear the land mines from his fields just to plant. As a result, farmers seeded fewer acres, focusing on potatoes, sunflowers and winter wheat.

“Many farmers reduced areas under winter crops, so we have about 40% decrease, for two reasons: One was we were not sure about the functioning of the corridor as well as weather conditions as we had a wet fall,” he says.

USDA estimates the conflict areas of Ukraine account for 46% of overall crop production. About 6.84 million hectares of winter grains were planted in that area verses 10.3 million in 2021.

Spring planting intentions are also uncertain due to the ongoing fighting and the price and availability of inputs.

Today many farmers are looking at the crops that are very easy to plant and do not require much fertilizer,” Gordiichuk says. “Many farmers this season are focusing on soybeans or sunflowers. That’s where I see there will be increased production, rather than corn.”

Exports were halted until the signing of the Black Sea Grain Initiative on July 22. Even with the corridor, Ukraine grain exports are far below pre-invasion volumes. However, farmers still feel it’s been effective.

Gordiichuck says since August they’ve exported 21 million tons of grains out of the corridor. Critical negotiations on the export deal are coming up, and Ukraine is asking for a one-year extension, plus an additional port to help with the inspections that have been slowed in recent weeks.

One Year After Russia's Invasion of Ukraine: How Has World Trade Realigned?

Fri, 24 Feb 2023 19:58:10 GMT

A year ago, Russia’s initial invasion of Ukraine injected uncertainty about global grain supplies into the market. As questions swirled surrounding the amount of grain Ukraine would be able to produce and export last year, the invasion sparked a bullish run in grain prices with prices ultimately hitting a new record last year. Today, initial concerns about world grain supplies and exports have been squashed by the reality of record exports out of the Black Sea Region.

The initial invasion news one year ago quickly sent wheat prices skyrocketing 50 cents in one day, and corn prices shot up 30 cents after the initial news. Crude oil also hit the highest level since 2014, soaring above $100 per barrel.

At the time, Dan Basse of AgResource Company said the chaos and uncertainty between the two major grain producers would cause a “realignment of world trade,” especially considering the two countries accounted for:

31% of world wheat trade
30% of world barley trade
29% of sunflower oil trade

At the time, Basse cautioned there were still several questions after the initial invasion, including timeline and potential sanctions that could follow. A year later, the war is ongoing, yet exports from the region are not only holding strong, but hitting record levels.

“I don’t think any of us would have imagined when the war started a year ago that we would have record wheat exports out of the Black Sea,” Basse says. “Now, principally, it’s a lot of Russia exporting 45 million or 46 million tonnes. As an analyst, I would not have thought that part of the world would have record exports of grain and wheat in a time of war. Nonetheless, that’s what’s happened.”

Basse points out Russia produced a very large crop last year. He says you can argue whether it was 92 million or 102 million tonnes of wheat, but it doesn’t change the fact Russia is sitting on a big crop. Until Europe starts planting the new crop in May and the focus shifts the weather’s impact on that crop, the scenario of large wheat stocks won’t change.

“Here today, Russia is not missing a bit, and it’s a problem because world milling prices is now trading over Gulf corn, so we’re going to be losing some corn export demand just because of the cheapness of wheat,” says Basse.

John Phipps: What the Crisis in Ukraine is Revealing About the Essential Use of Satellites

Tue, 31 Jan 2023 23:16:22 GMT

Necessity is the mother of invention, it is repeatedly said. And nothing helps clarify what is really necessary like war.

In contrast to the previous century, major conflict between developed countries is only a vague historical concept for most people today. Similar to the world wars and variously labeled conflicts like Korea and Viet Nam, the longer the Ukraine War drags on, the more comparisons we can make between memories of war and the realities.

The battle is upending global economics, trade, and geopolitical alignment. I would venture more national defense strategic plans are being revised with greater urgency that ever before as non-combatants watch and analyze not computer models, but real-world battlefield outcomes. The smaller adaptations being made by the citizens and militaries involved may have a more lasting effect.

For example, the cities of Ukraine are being demolished by a staggering bombardment level. So much so that experts around the world are debating when this year Russia will deplete its arsenal. There are indications it is already rationing artillery rounds and may consider using 40+ year old ammo. Even with careful storage, explosives that old won’t be popular with gun crews.

For Ukrainian civilians, one workaround that has proven its value in this devastation has been Starlink. As Russian barrages destroy cell towers and blow up landlines, bypassing them with an easy-to-use satellite internet connection is not just an option but a lifeline.

Starlink, about which I have spoken perhaps too often, can leapfrog shattered communications infrastructure using just the small dish and a little electricity. The same device that allows campers to get online can keep villages in rubble on the communication grid reliably. This visible proof could be a serious blow to efforts to bring cable and tower internet to remaining sparsely populated regions of the world, and especially US farm country.

Extending urban infrastructure never made economic sense, and as Ukrainians are showing us, the future outside metropolitan areas appears to be the rapidly growing armada of low earth orbit satellites, and soon more Starlink competitors. Maybe instead of billions for optic cable which will be routinely sliced by backhoes, our government should hand out Starlink vouchers.

Agriculture As Seen From the Heavens–Yesterday and Today

Wed, 28 Dec 2022 15:28:14 GMT

You may have seen in the news recently that NASA sent a spacecraft capable of carrying hu-mans back to the moon. On November 16, 2022, the Artemis I spacecraft lifted off from Cape Canaveral to return to the celestial body where we as a nation left our last footprints 50 years ago.

The Apollo 17 mission, in December of 1972, was the swan song of NASA’s Apollo program. It is astronaut Gene Cernan who still holds the distinction of being the last person to walk on the moon. Hopefully, history and programs like Artemis will change that in the next couple of years. If we’re reminiscing about space milestones, we must recognize another historic space program that also dates back to 1972. This program changed how we look at planet Earth and the agricultural system that feeds the people that inhabit it.

After the cancellation of the Apollo program in the 1970’s, NASA pivoted to focus its efforts back to missions that would serve humanity and planet Earth itself. One of those missions also recently celebrated its 50th anniversary. The program was called Landsat and it revolutionized what it means to monitor agriculture, analyze crop conditions and estimate crop yields on a global scale.

As of January 2022 there were over 1,000 satellites in orbit that fall into the category of Earth observation. Earth selfies have gone so mainstream that in many cases they are now free. Google Earth is probably the best known free eye-in-the-sky example. Admit it, what farmer doesn’t want to take a look at their own farm from space — or don’t tell anybody, their neighbor’s farm — all the while browsing from the comfort of their favorite easy chair. Sure beats sitting on those un-comfortable ones down at the FSA office.

Don’t let the free selfies fool you.

Earth observation imagery and data services is an enormous business. According to a Straits Research report, in 2021 the global satellite Earth observation market was valued at $3.58 billion. By 2030, it is projected to more than double at $7.88 billion.

Given what is trending today in economics, society and politics, the industry may hit those numbers much sooner.

First, we had a global pandemic that impacted production and supply chains around the globe. It was Earth observation satellites watching the disruptions in the fields, factories and shipping ports as the Covid-19 lockdowns spread from country to country.

Second, when Russia invaded Ukraine it put the bounty of the “Breadbasket of Europe” at extreme risk. Losses of both production and actual commodity exports have sent societal shock-waves far beyond Kiev and Moscow. Because of satellite imagery we know about one-third of Ukraine’s current corn crop may not be harvested. We will also know the status of whether the grain that was harvested ever makes it on a boat and makes it out of the Black Sea to Lebanon or Egypt. Otherwise, we will watch a global humanitarian crisis unfold before our eyes.

Finally, you have subject of climate change. Translated to government and corporate business speak, that means using the three letter acronym ESG. For us common laymen, that’s short for Environmental, Social and Corporate Governance. ESG criteria is basically a set of standards that serves as sustainability “scorecards” for governments and corporations. Remotely sensed Earth observation is key to monitoring environmental criteria (the “E” in ESG) including identifying sources of water pollution and measuring progress toward sustainability. Farmer translated, the “eyes-in-the-sky” now know whether or not you planted your cover crop for your carbon credit.

From a technology and timing standpoint, satellite imagery is basking in its moment in the sun. Dramatically reduced launch costs thanks to private vendors like Space X, the miniaturization of satellites like Planet’s groundbreaking shoebox-sized “Doves”, plus quantum leaps in cloud computing and artificial intelligence are propelling the earth observation business to deliver capabilities that are far better, faster and cheaper than even just five years ago.

What is becoming clear is that Earth observation satellite technology and related services are quickly extending its lead in the imagery horserace between satellites and drones.

In what seemed like a close race just a few short years ago, satellites have pulled ahead partly because of onerous FAA regulations that have grounded most advancements in agricultural related drone technology. Plus, you can cover a lot more ground at 400 miles up than you can at a maximum altitude of 400 feet.

There are so many names, both new and old, in this space it is hard to keep track of them all. Names like Pixxel, Iceye, Orbital Insight and Planet Watchers are considered the new kids on the block. In particular, Planet Watchers, is noteworthy because of its AI capabilities in estimating crop losses and crop yields. They have already lined up clients ranging from ProAg crop insurance, Nutrien Ag Solutions, The World Bank, and even the EPA.

Tomorrow’s demands for a close eye on agriculture and the health of the planet are likely to only grow.

Plus, every farmer knows that Mother Nature does not rest. Droughts, floods, and derechos are part of the annual song and dance. Add supply chain hiccups and carbon credit verification to the mix and you’ve got a lot more high altitude picture snapping to do.

To appreciate how important Landsat’s technology is, you must consider what also happened in 1972. Ironically, Landsat was launched on the heels of the Soviet Union’s greatest grain crop failure. Although the crop failure was widespread throughout the USSR, the sheer magnitude of the shortfall remained unknown to U.S. governmental officials until months later. The lack of timely global production estimates lead to the USSR being able to purchase massive quantities of U.S. wheat at substantially lower prices than the true market value.

It became known as the great Soviet grain robbery. The Kremlin bought one-fourth of the United State’s wheat harvest in 1972. Domestically, farm prices and consumer food prices skyrocketed. Was this the match that lit the fire of runaway inflation for years to come? That’s one for the eco-nomic and political pundits to debate until the cows come home. Such a global grain failure will not be hidden in darkness like that ever again. With 1,000 eyes-in-the-sky, we can now count every cow and every corn plant in every county, country, and continent in the world. Imagine what might be possible in fifty more years.

How Much Is The Ukraine-Russia Grain Corridor Worth In The Markets? What This Week Revealed

Mon, 07 Nov 2022 14:25:39 GMT

The grain markets saw waves this week, and agricultural economists say it revealed just how much traders think the vital grain corridor is worth.

Fireworks in the markets started Monday as Russia said it would no longer grain-export deal, however Turkey and the United Nations continued grain shipments, despite the news. Then, just two days later, Russia announced reversed that decision, with prices plummeting.

“We found out that the Ukraine-Russia corridor represents about 55 cents in the market,” says Ben Brown, agricultural economist at the University of Missouri “Prices went up 55 cents when Russia pulled out and they came back down 53 cents when it looked like Russia was back in.”

Brown says the market action was headline driven, but he points out there are were other fundamentals and outside factors that also pressured price.

“Exports are soft and struggling across some of our commodities across the board with the high dollar doing its job there as well and curtailing some demand,” Brown adds. “Then we look out ahead and think about what’s gasoline consumption look like or this next year? Where are we going to produce these bushels in the world? I think all those things are front in mind and continuing to play into these markets.”

What may be even more of a question is why nine months after Russia invaded Ukraine, rumors are still moving the markets.

“It has been important to see how these markets are moving in response to relatively modest news,” says Pat Westhoff, an agricultural economist with University of Missouri’s Food and Policy Research Institute (FAPRI). “You wouldn’t expect that kind of movement to happen on just a rumor, right? And here, we’re back to where we were just a few days ago. So, expect to see continued uncertainty, continue moving markets, as there’s new reports about the latest possible development across the world.”

Farmers are also navigating the news, watching prices shoot up more than 50 cents one day, and two days later, wipe out all those gains.

“I’d say it’s across the board risks that we have to really talk about now today, whether it’s what do I want to do on the input side, we know those inputs continue to be high, and in some cases, there are opportunities, maybe for some lower costs,” says Scott Brown, University of Missouri agricultural economist. “But at the same time, I’ll just say that there’s a lot more dollars at stake in getting that crop in the ground. Interest rates are higher, I don’t think all this uncertainty goes away. How much can these individual operations handle in terms of added risk to their operation? It’s not a one size fits all. But risk management is so much more important. I’d rather hit singles and doubles than strike out trying to hit a home run.”

Ukraine Ag Export Numbers Have Recovered to Prewar Levels

Thu, 20 Oct 2022 19:46:49 GMT

Ukraine said its exports of agricultural products have recovered to around prewar levels.

Data from Ukraine’s Ministry of Agrarian Policy and Food shows the country shipped 6.9 million metric tons of grain, vegetables and edible oils last month, almost matching the 7.1 million tons exported in September last year.

Exports have accelerated this month, the ministry said, with shipments of agricultural products since the start of the Autumn season hitting 10.4 million tons so far — one million tons more than the entire summer season.

Farmers, meanwhile, have planted fewer crops this year, and Russia still controls a large slice of Ukrainian farmland.

On the Energy Front

These export numbers come as Ukraine has been forced to introduce rolling blackouts nationwide on Thursday, after the country lost at least 40% of its power-generating capacity following days of Russian attacks on energy infrastructure targets.

Ukraine’s national energy company said Wednesday it needs to apply the restrictions on consumers to make the system “work in a balanced way.” The announcement comes as Russia continues to inflict serious damage at power facilities with Iranian-supplied “Shahed-136 “kamikaze” drones, officials said.

U.N. Security Violation

Western powers say usage of the drones would violate U.N. Security Council Resolution 2231, which restricted certain transfers from (or to) Iran.

Iran has repeatedly denied supplying any military hardware to Russia, while the Kremlin has warned the United Nations against investigating its use of drones in Ukraine.

“Otherwise, we will have to reassess our collaboration with them, which is hardly in anyone’s interests,” Russia’s Deputy U.N. Ambassador Dmitry Polyanskiy declared.

The events are playing out as U.N. officials negotiate with Moscow to extend and widen a July 22 deal that resumed Ukraine Black Sea grain and fertilizer exports (the pact could expire in November if an agreement is not reached).

More on ag exports:

Farmers in ‘Surprising’ State help Ease Grain Distribution Disruptions
Biden: Double Crop Because ‘We Can’t Take Any Chances’

Ukrainian Farmer Pleads: Will You Stand With Us In Our Moment of Need?

Thu, 22 Sep 2022 02:56:19 GMT

Kornelis “Kees” Huizinga has farmed in Mankivka Rayon, Cherkasy Oblast in central Ukraine for 20 years. The operation grows onions, carrots, wheat, barley, canola, sugar beets, corn, sunflowers and navy beans and has a modern dairy farm. He is a member of the Global Farmer Network .

When I became a farmer, I knew that I’d have to wage a figurative war on the traditional foes of food production: pests, weeds, and disease. I didn’t expect to find myself in an actual war zone with a lethal enemy.

Yet that’s what happened when Russia invaded Ukraine, the place where I grow crops and raise livestock.

My family and I live and farm close to the center of the country, a bit north of the city of Uman — a specific target of Russian assaults because of its ammunition depots. As the bombs dropped on Thursday, the windows and doors of my house rattled. We saw smoke rise in the distance. We heard the roar of rockets overhead.

My wife and kids have fled our farm, seeking safety near the border with Romania. I’ve stayed behind on the farm. They already made it into Romania and are staying at a friend’s place.

As I write, things are quiet. I don’t expect them to remain that way. The violence could erupt again at any moment. At the moment of this correction there are some explosions in Uman.

This is my plea, from a humble farmer in Ukraine to the people of the world: Please ask your governments to stop this reckless war, launched by that cruel and power-hungry authoritarian, Vladimir Putin.

Ukraine Did Nothing to Deserve This Fate

Since the end of the Cold War and the breakup of the Soviet Union, we have strived to live in peace and harmony with the wider community of nations. We have sought to develop a civilized democracy. Although we have a long way to go, we have made big progress.

I’ve tried to do my part. As a farmer, of course, I’m far removed from the halls of power. I don’t practice statesmanship or conduct diplomacy.

In an agricultural nation like Ukraine, however, my job is to feed my country and the world.

On our farm, we milk 2,000 dairy cows every day. In our fields we grow wheat, barley, canola and more. It may be winter, but the fertilizing season has started, as we apply nitrogen to our fields. Planting usually begins by the end of March or the beginning of April.

I don’t know if any of this will be possible this year. I don’t know what the next hour holds for us, let alone tomorrow or next week or next month.

I’m already wondering how we’ll feed our cows. We have food on hand, but we may have to weaken our feed ratio so that our supplies last longer. This will lower our output.

The future may be uncertain, but I know this much: If Ukrainian farmers like me can’t get to work, our crisis will become unbearably worse.

We’re resilient, and we know how to get through hard times, such as droughts and other weather challenges. Like the rest of the world, we’re now emerging from a pandemic that disrupted labor markets and supply chains.

War Poses a Unique Threat

Reports about casualties are pouring in. The deaths could soar as Russians drive their tanks into our cities. The military conflict will shatter the lives of ordinary citizens. The messages I get from other farmers in the east and south are that the Russians drive around the bigger cities or encircle them.

We’re likely to face a humanitarian crisis as people flee the destruction. Refugees will need shelter and food. There’s no guarantee they’ll get it. First primitive refugee camps on the western borders are being set up at the moment of writing.

History warns us about one horrible possibility. In the 1930s, Ukraine suffered from the Holodomor, which in the Ukrainian language means “death by hunger.” Back then, Soviet ruler Joseph Stalin tried to crush an independence movement by inflicting a manmade famine on Ukraine. Millions died in what today many people regard as act of genocide.

Nobody in Ukraine ever should starve. We are an agricultural breadbasket. We have more arable land than any other European country. We are the world’s top exporter of sunflower and sunflower oil. We are the world’s second largest producer of barley, its third largest producer of corn, and a global leader as a producer of potatoes.

Ukraine can meet the food needs of 600 million people, according to one estimate. That’s pretty good for a nation of 44 million people and about 35,000 farms.

If we drop out of the global market, food prices will rise everywhere. Price inflation is already hurting ordinary consumers around the world, but now it will worsen.

This means that Russia’s unprovoked war on Ukraine is not only Ukraine’s problem. It’s a threat to everyone on the planet. Russia has attacked us all.

Will you stand with Ukraine in our moment of need?

Biden's Plan to Boost Wheat, Soybean Acres Called ‘Baffling, Convoluted’ Without Much Impact

Wed, 21 Sep 2022 07:43:16 GMT

The Biden administration wants more total planted acres with a focus on soybeans and wheat. That is the clear conclusion from what the administration is proposing as part of its latest wish list for Congress.

As first detailed in a special report Thursday, the proposals need congressional approval and likely would be altered by lawmakers if it ever gets out of both chambers. The requests include dramatic boosts in commodity loan rates for selected crops, including soybeans, wheat, rice and pulse crops. But not corn and cotton. It would also pay a $10-an-acre crop insurance subsidy that would be paid to farmers who double-crop soybeans and wheat.

It’s part of a larger plan announced Thursday. President Biden is seeking an additional $33 billion in aid for Ukraine, to fund weapons and provide longer-term economic and humanitarian aid to Ukraine, as the country’s conflict with Russia enters its third month, which was outlined in a White House fact sheet .

Reaction to Policy Proposal

The following is initial analysis of the administration’s farm policy proposals, based on talks with and emails from several contacts:

The projected market prices are significantly above loan rates (even these new loan rates). So, while it may be nice to have a little more liquidity at harvest, these loans will likely all have to be repaid. If my problem is tight margins due to historically high costs of production, exactly how am I supposed to get excited about a loan that must be repaid within the marketing year?
For the double-crop incentive, is it only in counties with approved double cropping? Regardless, what exactly is $10/ac. supposed to incentivize that $17/bu. in the market won’t already?
Since Congress would have to approve all of this, why aren’t they sending up a proposal to help offset skyrocketing costs?
The proposal in total is estimated to cost $400 million over two years. Are there costs associated with the significant boosts in selected commodity loan rates?
This is clearly a proposal that shows the administration’s concern about 2023 crops since little if anything can be done to impact 2022-crop plantings.
The proposals could skew plantings in 2023 if corn prices decline relative to soybeans and even wheat.
The crop insurance program is again being used relative to trying to adjust farmer planting behavior.

Related news: White House Asks Congress for Additional $33 Billion in Aid for Ukraine

Wheat: The proposal would increase the wheat loan rate (2022 and 2023 crops) to $5.52 per bushel from the current $3.38 per bushel.
• July Chicago wheat futures closed Thursday at $10.85 3/4.
• 2021 season average cash price: $7.60.
• 2021 production: 1.645 billion bushels.
• 2021 put under loan: 10.057 million bushels.
• 2021 loan value: $34.572 million.
• 2021 loans outstanding: $13.873 million as $20.698 million has already been repaid.
• Less than 1% of 2021 crop was put under loan.

Soybeans: The proposal would boost the 2022 and 2023 loan rate by 40%, setting it at $8.68 per bushel versus the current $6.20 per bushel.
• November soybean futures closed at $15.21 on Thursday.
• 2021 crop season average cash price forecast for 2021/22 is $13.25.
• 2021 production: 4.435 billion bushels.
• 2021 put under loan: 80.143 million bushels.
• 2021 loan value: $499.16 million.
• 2021 loans outstanding: 43.469 million bushels with a value of $270.18 million as producers have already repaid $470.55 million.
• Less than 2% put under loan.

Ukraine’s Impact

“USDA expects that U.S. farmers may be able to increase production during the 2023 crop year and make up almost 50% of the level of wheat typically exported by Ukrainian farmers.” Ukraine exports are forecast at 19 million tonnes in 2021-22; exports were 16.85 million tonnes in 2020-21 and 21.02 million tonnes in 2019-20. If the administration wants to increase production by 50% of the exports by Ukraine, that would mean an increase in production of around 10 million tonnes or 800 million bushels based on the 2021-22 export forecast. The administration is not identifying an increase in production for soybeans.

Low-Cost Money

The April CCC interest rate on a loan taken out in April was 2.125%, up from 1.250% in January. If the same pace of increase took place, that would put the interest rate at 2.75% in July and 3% in August. While these rates are below commercially available rates, the monthly interest rate levels will be increasing as the Fed raises interest rates. USDA sets the interest rates on CCC loans at the level USDA is charged for the money by the U.S. Treasury plus 1%.

Producers can obtain a marketing assistance loan by pledging the commodity as collateral, with the interest rate on the loan set in the month the loan is disbursed. Producers have to have title to the grain and cannot sell the quantity under loan without first repaying the loan. Producers have to repay the loan plus interest at maturity.

With a marketing loan in place, that allows producers to repay their loans at potentially less than the loan rate if prices fall below the loan rate levels — referred to as a marketing loan gain. However, more producers have opted to capture that difference between the loan rate and the loan repayment rate via a loan deficiency payment (LDP). The producer does not have to pledge the commodity as collateral for a loan nor make any repayment of the loan.

The loans are also a non-recourse loan which means producers have the option of delivering the pledged collateral to satisfy the outstanding loan at maturity. A settlement value is determined and applied to the outstanding loan principal and interest.

The loan program has seen declining usage over the years and a small percentage of U.S. production typically is put under loan, particularly soybeans and wheat. A greater percentage of minor oilseed crops in the U.S. are put under a CCC loan.

Given that most planting decisions have been made for 2022, it seems unlikely there would be little impact to production in 2022. The exception might be via the double-crop provisions, but there are also questions where that could be allowed given that a limited number of areas of the country are considered double-crop areas.

Bottom Line

The action is clearly signaling the administration wants more wheat and soybean acres in 2023. That would appear to be at the expense of corn and cotton acres, given the statement that feed and fiber farm program provisions would be kept the same. Increasing rice acres would seem to be difficult given that is a far different production system than soybeans or wheat.

The proposals almost seem to work at cross purposes. While it would give producers financing at a favorable interest rate, the goal is to boost production, i.e., make more supplies available to the market. If the crop is under loan, producers would have to repay the loan for those bushels to be made available to the market.

Other questions:

• What impact might the actions, labeled as just two-year actions, have on the next farm bill? (Recall that the last farm bill rejected some calls for a 12-month commodity loan program, but the administration proposals have this feature for selected crops.)
• Will the proposals skew the policies that are developed as part of a new farm bill?
• Will the proposals distort the costs for farm programs relative to the baseline? However, being as they are billed as temporary, that should not affect the baseline.

Still, higher loan rates for some crops versus others will raise an equity debate in the farm bill process. And the word equity is paramount to the current group of Democrats and White House. That could be used by some lawmakers to boost loan rates permanently under the next farm bill, potentially increasing farm program costs as increased production will at some point push prices lower, potentially below loan rates, exposing the government (taxpayers) to higher outlays. And the loan rates come into play for the Price Loss Coverage program. Would these higher loan rates then also expose the government to more potential outlays under that program? And if loan rates are increased via the next farm bill because of this temporary effort, could that also skew program participation?

Upshot

Most sources do not see much impact, with some calling the proposals “baffling” and “convoluted.”

Related News

White House Asks Congress for Additional $33 Billion in Aid for Ukraine

White House Asks Congress to Significantly Boost Some Commodity Loan Rates for Two Years

Round Robin: Which State Will Have the Highest Crop Yields?

Wed, 10 Aug 2022 18:40:45 GMT

The 2022 Pro Farmer Crop Tour will be sweeping the Midwest soon. We spoke with a handful of master crop scouts to get a preview of what to expect on each leg of the tour.

Eastern Leg

After 18 years following the eastern leg of the crop tour, Richard Guse, a farmer hailing from Waseca, Minnesota, says his excitement to see old friends and new crops never wanes.

“Depending on the year, seven to eight of us meet up on Friday night and spend the weekend driving down to Ohio and work our way back,” says Guse. “It’s really nice to get together and share an evening meal”

Disease is always on the forefront of Guse’s mind when he sets off on crop tour, and he says this year will be no different.

Kyle Wendland, a farmer in Fredericksburg, Iowa, says his sites are set on drought this year.

“I’m interested to see what emergence looks like across the corn belt,” he says. “With the wetter spring, some people might have mudded the crops in so we might see some poor stands. I’m curious to see if the ear counts are good like last year.”

Wendland says prevent plant situations and double-cropped beans are on his list as well, but he’s not sure he’ll see much of it on the eastern leg this year, as most fields in his area are looking “really good.”

Western Leg

Moisture steadily fell from the sky onto the central Midwest this spring and into the growing season. Western territories weren’t as lucky, which has some people shifting their crop tour leg interest.

Peter Meyer, Head of Grains and Oil Seeds Analyst at S&P Global Platts, says he’s hopped around from leg-to-leg in the past, he doesn’t feel the eastern leg ranks as high on his priority list this year.

“I’ve already driven 3,000 miles from Ohio to South Dakota and back the last week of June. I don’t think there’s much of a story in the East,” says Meyer. “While they got planted a little late, it looked okay. Especially South Dakota—it’s the best I’ve ever seen for them.”

Brazil’s poor soybean crop last year coupled with the situation in Ukraine , has put “a lot of pressure” on U.S. producers this this season, according to Meyer. To get a grasp on what’s to come this fall, Meyer says he intends to stay on the western front to analyze the drought situation .

Others, like Brent Judisch—a farmer hailing from Cedar Falls, Iowa—hope to cover as many fields as possible to assess weed control needs.

“We have scouts that we chat with week-to-week so we can understand the situation so there aren’t a lot of surprises. With that said, tar spot is becoming a major issue ,” says Judisch. “I’m wondering what the weed control looks like, especially in beans with the shorter sprayer dates and hours with Dicamba.”

Tim Gregerson, Herman, Nebraska farmer, echoed Judisch, saying he’s concerned about tar spot in his region as well. However, he’s not as concerned with weeds this crop tour as he is with being a hostess.

“I met a new guy—a meteorologist at a junior college in Long Island—on the crop tour last year. His grandparents started their operation within 6 miles of my grandparents’ home farm, and we didn’t know it until last year,” says Gregerson. “He’s going to come stay with me for a day and a half before the crop tour.”

The two keep in touch regularly, according to Gregerson, which he says is a common theme after attending crop tour just once.

“I talk to a few guys pretty often during the week and I’m really looking forward to getting together again in person,” he says.

The Pro Farmer Crop Tour will be held from Aug. 22-25. To register for the event, click here .

Read More

2022 Crop Tour: A View From The Field

Reserve Your Front-Row Seat for the 2022 Pro Farmer Crop Tour

July Farm Country Forecast: Hot Like a Firecracker

Is Your Operation Prepared for a Tar Spot Outbreak?

Ukraine Successfully Shipped Some Grain Out This Week, But Could Now Face a Bigger Challenge

Fri, 05 Aug 2022 20:38:45 GMT

Less than a week after the first shipment of grain left Ukraine destined for Lebanon, three more ships departed Friday. AP reports the ships are bound for Ireland, the United Kingdom and Turkey. Market watchers are still waving the red flag about not only how much grain will get shipped from Ukraine , but if the vessels will safely return.

The shipments are part of a paper deal between Ukraine and Russia, which was brokered by Turkey late last month. The start of shipments out of Ukraine’s ports are promising, but grain exporters are still navigating murky waters with uncertainty and caution.

“They can only ship during the daylight hours,” says Dan Basse of AgResource Company . “It’s going to be process, and I think the tangles in the process are going to be the key, by that I’m saying things are not going to work normally and you’ll find some commercials that are not willing to staff because they do not want to put their people in harm’s way.”

Bigger Question is if Ships Are Able to Return

The risks are extremely high for Ukrainian exporters, even with the agreement in place. Some analysts say the bigger hurdle may be the trip back home.

“It’s one thing to get these boats out, it’s quite something else to have in return,” says Peter Meyer of S&P Global Commodity Insights . “We will get excited about Ukrainian exports when these boats return for another trip out. I mean, insurance rates are 200 times what they were before the incursion.”

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Meyer says since the vessels were loaded months ago, there’s also a question of the quality of grain currently in the vessels.

“For all intensive purposes, some of them could have concrete in them, I mean that tongue-in-cheek, but for us, it’s really going to be watching whether these boats come back,” Meyer adds.

No Incentive for Ukrainian Farmers to Plant

USDA could make revisions in its upcoming World Supply and Demand Estimates (WASDE), which will be released next week. Basse says AgResource’s view is USDA’s estimates don’t need to shift too much, but there’s a larger issue for farmers and grain users than even the export situation in Ukraine.

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“The real problem is this Ukrainian farmers are getting such low prices for their wheat and corn bids right now. I don’t find any of our clients that are looking at planting anything substantial for wheat, or winter rapeseed, heading into the late August and September timeframe,” Basse adds. “So to me, it’s a story that’s ongoing with maybe more bullishness now centered towards 2023, because Ukrainian grain farmers just don’t have the capital to plant the crop that they have ahead.”

Mission Nearly Complete: Ukraine's 1st Grain Shipment Clears Inspection

Wed, 03 Aug 2022 14:09:53 GMT

The first shipment of grain from Ukraine since Russia’s invasion in February is one step closer to reaching its final destination of Lebanon. According to Reuters , the United Nations said the shipment of over 26,000 tons of corn was cleared to proceed on Wednesday.

The Razoni vessel can now proceed through the Bosphorus Strait, an internationally significant waterway located in northwestern Turkey. The ship was inspected by officials from Russia, Ukraine, Turkey and the UN. Reuters reports a three-hour inspection conducted be a team confirmed the crew and cargo were authorized to proceed.

As reported by AgWeb earlier this week, the Razoni, which weighed anchor at the port of Odesa, was led by a government vessel through mines that had been laid by Ukrainian forces to forestall any attempt by Moscow to launch an amphibious assault on Odesa. It’s part of a grain deal brokered by Turkey to help address the world’s grain and food supply concerns.

A rescue ship followed and Russia’s Navy, which controls the Black Sea, granted safe passage. The Razoni was carrying 26,527 metric tons of corn, the United Nations said. The vessel had been stuck in port since Feb. 18, before the start of the war.

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The shipment news came just a day after Ukraine confirmed Oleksiy Vadatursky, Ukraine grain tycoon, was killed in Russian shelling of Mykolaiv. He was killed with his wife in a “massive” Russian shelling of the southern city of Mykolaiv. They died when a missile hit their home overnight, local officials said.

Reports say there are 16 more ships waiting to leave Odesa in coming days. Ukraine’s agriculture minister, Mykola Solskyi, said last week that there was $10 billion worth of grain stored in Ukraine and that the incoming harvest would add a further $20 billion to that amount.

Zelenskiy Says Shipment is Fraction of Needed Exports

According to Reuters, Ukrainian President Volodymr Zelenskiy is still casting doubt on how much grain can actually be exported. He made the comments during a video to college students in Australia on Wednesday.

Reuters reports Zelenskiy says the first shipment is carrying a faction of the crop Kyiv should promote to salvage the hurting economy. He says Ukraine needs to export a minimal 10 million tonnes of grain to urgently assist deliver down its price range deficit which was operating at $5 billion a month.

“Only recently, because of the UN in partnership with Turkey, we had a primary ship with the supply of grain, nevertheless it’s nonetheless nothing. However we hope it’s an inclination that may proceed,” said Zelenskiy according to Reuters.

Good Vs. Bad News: Ukrainian Grain Has Set Sail, But Unrest Could Limit a New Crop

Wed, 03 Aug 2022 02:15:48 GMT

For the first time since Russia invaded Ukraine, a ship with grain left Odesa on Aug. 1. The ship, the Razoni, was carrying 26,527 metric tons of corn, said the United Nations.

The vessel had been stuck in port since Feb. 18, before the start of the war. Its passage was part of the U.N.-backed deal between Russia and Ukraine signed in July to resume exports of Ukrainian grain through the Black Sea.

“There are still more questions than answers, but we did get a vessel out the door,” says Dan Basse, president of AgResource Company. “At least we know we have a corridor.”

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The shipment occurred a day after Oleksiy Vadatursky, the multi-millionaire owner of Nibulon, was killed , along with his wife, Raisa Vadaturska, during Russian shelling of Mykolaiv.

“He was the founder of Nibulon, which is the largest private grain company and exporter within Ukraine,” Basse says. “They were clients of ours, and I’d met him several times. It’s such a sad day. The Russian rocket came into his bedroom in the dark of night. So, to believe he wasn’t targeted, I think would be a misnomer.”

More Vessels to Ship?

This current export agreement between Russia and Ukraine needs to be renewed every 120 days, Basse says. His estimates show there are around 55 vessels ready to ship out.

“If you move out just one vessel per day, it will take half of the current agreement just to get the stranded vessels out,” he says. “Plus, when you’re only moving during the daytime and not at nighttime, the chances of getting a lot of grain out the door are not that great.”

To add to the complexity, Basse says grain companies are nervous about standard operation after the attack on Nibulon’s owner.

“We have a lot of other grain companies in Ukraine saying, ‘I don’t want to put my people in harm’s way.

Do I need to have my managers or operators sleeping in different hotels and other places? It’s very complex,” Basse says. “There’s lots of nerves and emotions; drama is high.”

Growing Crop Concerns

As the battle in Ukraine stretches on, just how many crops are planted, harvested and shipped remains a guess. In May, USDA forecast Ukrainian wheat production to fall 35% year-over-year with corn production down more than 50%.

“Normality is a long way down the road for Ukraine and agriculture in general,” Basse says. “The real problem we’re having now is trying to understand what the Ukrainian farmer will do with new crop.”

The price of wheat coming off the combine, if you were harvesting today in central Ukraine, would be about $2.70 a bushel, he says. That is up from $2.20 per bushel a few weeks ago, but excessive transportation costs exist to get the grain to port or other locations.

“They will start a new planting season in wheat at the end of August and early September,” Basse adds. “Our discussion with farm clients there is they’re not planning on planting any winter wheat. So, what does that mean for the world going forward? And if you don’t have a crop going in the ground, by the end of September early part of October, it will create a shortage of world grain.”

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Is the World Really Running Out of Wheat?

Mon, 01 Aug 2022 15:11:52 GMT

If someone told you the world has only a few weeks of wheat left before inventory runs out, would you believe them?

U.S. estimates show global wheat levels are stockpiled at 33% of annual consumption. The war in Ukraine, coupled with drought conditions in wheat growing regions, proves that government estimates are “not adding up,” according to Sara Menker, CEO of Gro Intelligence.

Menker’s team at Gro Intelligence finds, as of May 19, global inventories of wheat amount to 20% of annual consumption, meaning the world has just 10 weeks’ worth of global wheat consumption in storage.

“Conditions today are worse than those experienced in 2007 and 2008,” she says. “The lowest grain inventory levels the world has ever seen are now occurring, while access to fertilizers is highly constrained, and drought in wheat growing regions around the world is the most extreme it’s been in over 20 years.”

Trade Tensions Rise

This news comes as Ukraine continues to face setbacks in exporting its 20 million tons of stored grain. According to Jim Wiesemeyer, ProFarmer policy analyst, setbacks will continue as Russia destroyed a major Ukrainian grain export terminal in Mykolaiv (southern Ukraine) over the weekend.

“Before Russia’s invasion, around 98% of Ukraine’s grain exports would flow from ports on the Black Sea,” he says. “But those ports have been shut by a Russian naval blockade, and warehouses, rail yards and other key export infrastructure have been targeted and damaged by Russian attacks.”

Wiesemeyer says tensions continue to heat up as the U.S. warned 14 countries—mostly in Africa—that Russia is trying to profit from stolen Ukrainian wheat. He says three Russian cargo vessels have been suspected of stealing and transporting Ukrainian wheat to sell to starving, drought-stricken countries in Africa.

What’s in store for 2022?

On May 12, USDA released wheat projections for 2022. The estimates suggest 775 million metric tons (MMT) of wheat will be produced globally, which is only down 4 MMT from 2021.

USDA’s numbers show a 50% drop in Ukrainian wheat production, while Russia is on track to produce slightly more than 2021.

As Menker mentioned, heat stress is landing blows in wheat markets. India is experiencing this firsthand, which is why USDA expects it will product 11 MMT less in 2022 than 2021.

However, Aaron Smith, professor of ag economics at UC Davis, says China is the country the U.S. needs to keep an eye on.

“By the end of the 2022-23 crop year, USDA projects wheat carryover inventories to decline to 34% of consumption,” he writes. “However, more than half of those inventories are in China, which has been building its grain stockpiles for the past few years. These stockpiles are likely not accessible to world markets (assuming they are estimated accurately).”

Smith says inventories outside of China are below average, but not as low as in previous years.

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Ukraine Successfully Shipped Some Grain Out This Week, But Could Now Face a Bigger Challenge

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No Incentive for Ukrainian Farmers to Plant

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