Ukraine

In Ukraine, We Just Keep Farming

Sat, 20 Sep 2025 13:58:00 GMT

By Kees Huizinga: Mankivka Rayon, Cherkassy oblast, Ukraine

A farmer died on the front lines last week.

He was Oleksandr Hordienko, a Ukrainian who grew wheat in the Kherson region. As he drove his car alongside a tractor in a field on September 5, a Russian drone killed him.

“A Ukrainian will remain on his land, dying, but not leaving it. He will die but you will not take him from his land,” said Hordienko to the Wall Street Journal , in a remarkable article published shortly after his death.

My country has been at war for more than three and a half years, ever since Russia attacked in 2022. We’ve held off the aggressors so far, but the fighting grinds on.

I didn’t know Hordienko. He farmed in an area that has seen some of the worst attacks. Russia terrorized him with drones. He told the Journal that he had shot down more than 80 with his rifle.

Then the Russians went after him: “They’re hunting me,” he said in July.

I’ve heard of farmers who use drones for the peaceful purpose of growing food. The Russians use drones as weapons of war against farmers and others.

“Moscow’s army last year started using small, explosive drones to target civilians,” wrote reporters Jane Lytyvnenko and Oksana Grytsenko. “Now, it is targeting grain production.”

They compared these strikes to Joseph Stalin’s Soviet-era efforts to starve and kill millions of Ukrainians in the 1930s, during a manmade famine known as Holodomor .

My own farm is in central Ukraine, more than 200 miles from where Hordienko worked. I haven’t had to deal with anything like he did. Even so, my home can feel like a war zone, at least mentally. We see Russian rockets and drones fly overhead. Ukrainian air defenses try to shoot them down, and they’ve knocked out six or seven drones over our fields. Luckily, the debris did not fall into our villages, and nobody was hurt.

Every now and then, the army takes one of our employees. This makes it harder for us to farm, but I understand the reason: We need soldiers to defend ourselves. One of our guys, an electrician, was recently released as a prisoner of war. He spent more than two years in terrible conditions in Russia. He’s back with his family, and I hope he’ll be able to return to work soon.

When our farm is busy and everything is running well, I sometimes forget that we’re in a war. But it never lasts long. An air-raid alarm will remind me of reality.

There is good news: Our farm is profitable again. Before the war, Ukrainian agriculture boomed. Farmers like me increased production across our country fivefold in about 20 years. Ukraine became a major player in world markets.

The war threatened all of this, of course. My farm struggled to survive, especially during the first two years. They were an economic disaster.

Now we’re back in business. In August, we harvested canola, wheat, and barley. The yields were good. We’re also growing sugar beets, sunflowers, corn, and soybeans. We’ve had a dry year and expectations for the spring are a bit below normal, but the crops look okay given the circumstances.

We’re also able to export what we grow. Thanks to the Armed Forces of Ukraine (AFU), the Black Sea ports are open. We’re getting good prices and contributing to global food security. The Russian fleet is mostly destroyed and the ships that remain stay away, but drone attacks remain a constant threat.

Before the war, I worried a lot about the weather, in the way of farmers everywhere. I’ve now come to accept that I can’t control what it does. I know that a single rocket or drone can end everything, as it did for my fellow farmer Hordienko.

When I wake up, the first thing I do is check the weather report because I still must adapt to its conditions. The second thing I do is look at the news to see if Russian president Vladimir Putin has died. I fear that this must happen before the war can end.

And then I just keep farming. That’s what I can control.

Like all Ukrainians, I mourn the death of Hordienko—and all the losses we’ve suffered in this cruel war.

I’ll also remember some of Hordienko’s last words: “We will fight for this land. For us, this land is everything.”
__________
In this video , Kees Huizinga, who authored this piece, shows firsthand the challenges farmers face as they work their land during war.

Kornelis ‘Kees’ Huizinga has farmed in central Ukraine for 20 years, growing onions, carrots, wheat, barley, canola, sugar beet, corn, sunflowers, and navy beans. They also have a modern dairy farm.Kees was recognized as the 2022 GFN Kleckner Global Farm Leader award and is a member of the Global Farmer Network www.globalfarmernetwork.org

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.

Is There Any War Premium Even in the Markets Today?

Fri, 14 Feb 2025 21:52:16 GMT

President Donald Trump said on the campaign trail he would end the war in Ukraine — and this week, he stated negotiations would start “immediately.”

The news came after President Trump held what he called a “lengthy and highly productive” phone call with Russian President Vladimir Putin Wednesday morning.

Then, later in the week, Ukrainian President Volodymr Zelensky met face-to-face with Vice President JD Vance for highly anticipated talks at the Munich Security Conference, where Zelensky urged the United States “not to make any decisions about Ukraine without Ukraine.”

Zelensky also said he would only meet in person with Putin if a common plan is negotiated with President Trump first. Zelenskyy also said he believes Trump is the key to ending the Russia-Ukraine conflict.

As negotiations appear to be taking shape, the conflict in Ukraine has also been in focus for certain markets since Russia first invaded Ukraine nearly three years ago. The initial invasion sent wheat prices soaring.

So, it begs the question: is there a war premium built into the markets today? According to Joe Vaclavik of Standard Grain, the answer is simply, “no.”

“There’s no war premium, not in my opinion. You take a look at a wheat chart and go back to 2022 when prices spiked on the initial invasion. We’ve done nothing but trade lower in wheat for more than two years. It’s been a downtrend, a multiple year downtrend while the war was going on,” says Vaclavik.

Vaclavik points out wheat prices have seen strength lately and are basically back to pre-Covid levels.

“Why would I believe now that an end to the war is bearish when the price action has been nothing but bearish as the war has gone on for the last two years? I just don’t buy into that,” says Vilsack.

Chip Nellinger of Blue Reef Agri-Marketing agrees with Vaclavik, saying even if the war gets resolved, it doesn’t necessarily mean the situation in Ukraine will immediately turn back to normal.

“That winter wheat crop is in the ground already and struggling with dry weather over there. They’ve got cold temperatures. And so it is what it is on the wheat side,” says Nellinger.

Nellinger adds the wheat chart has turned more friendly, with wheat prices posting multi-year highs.

“Looks to me like the funds are about set to come out of their short position. You have more bullish fundamentals now than we’ve had in quite some time. So maybe a year out, 2026 or 2027, things start to get back to normal in Ukraine, but right now it is where it is and they’re not going to just magically produce record amounts of grain just with a peace agreement here over the next couple of weeks.”

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.”

Missile Strike by Russia Now Considered One of the Deadliest Attacks On Civilians Since the War Started

Fri, 06 Oct 2023 18:36:17 GMT

Russia conducted a missile strike on Thursday near the eastern Ukrainian city of Kupiansk, resulting in the deaths of at least 51 people, including a child. This attack is considered one of the deadliest against civilians since the onset of the war.

The missile strike, carried out by Moscow’s forces, targeted a cafe and a shop in the village of Hroza, situated in the Kharkiv region. These establishments had local residents inside at the time of the attack.

Ukrainian Defense Minister Rustem Umerov expressed the urgent need for more defense systems in Kyiv to protect the country from acts of terror. There are concerns about a potential reduction in military aid from Western allies, making it crucial for Ukraine to bolster its defense capabilities.

The United Nations’ humanitarian coordinator in Ukraine conveyed that the images emerging from the scene of the missile strike are profoundly distressing, highlighting the devastating impact on civilians in the region.

Russia Also Attacks Ukrainian Grain Storage

Russian drones attacked port infrastructure in Ukraine’s Odesa region, damaging a grain silo near the Danube River. A Turkish-flagged general cargo ship hit a mine yesterday in the Black Sea off the coast of Romania and sustained minor damage.

Russia resumes seaborne diesel exports with new restrictions after recent ban. Russia decided to allow the resumption of seaborne exports of diesel fuel, just weeks after imposing a ban that had significant global market repercussions. The ban had been instituted in response to domestic fuel cost increases that contributed to inflation concerns ahead of Russia’s presidential elections in March. Link for details via Bloomberg.

Under the updated regulations, diesel shipments can restart, provided that the fuel is delivered to Russian ports via pipelines, particularly to the western ports that account for most exported volumes. This move is expected to provide relief to importers, as Russia is a major seaborne exporter of diesel-type fuels.

The new rules are set to free up approximately 90% of the pre-ban seaborne export volumes, estimated at around 630,000 barrels per day. However, the regulations also stipulate that producers must retain at least 50% of their diesel output within the country, ensuring domestic supply.

Impacts: The lifting of the ban caused key metrics for diesel traders to decline temporarily, with the fuel’s premium over crude oil falling before recovering. The prompt timespread, which provides insights into market tightness and supply urgency, also saw fluctuations. Additionally, exporters who do not produce their own diesel but purchase volumes from the domestic market will now face high export duties, set at 50,000 rubles (approximately $500) per ton, close to the current price of Russian inter-seasonal diesel on the SPIMEX commodity exchange.

The Russian government is also fully restoring subsidies to refiners to meet domestic fuel demand and compensate for price differences between domestic and international markets. This decision followed a reduction in subsidies last month, which had been criticized by President Vladimir Putin for exacerbating domestic fuel market conditions.

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.

Jerry Gulke: Global Events Rattle Grain Markets

Tue, 25 Jul 2023 14:57:41 GMT

A week ago, Jerry Gulke discussed how global events could affect agriculture. Now we know.

“We found out just how rattled markets can get,” says Gulke, president of the Gulke Group .

May corn was up 3¢ and December corn prices were down 18¢, for the week ending Feb. 25. May soybean prices were down 19¢, and November soybean prices were down 48.75¢. May wheat prices were up 55.75¢.

USDA held their annual Agricultural Outlook Forum this week. For 2022, their early acreage estimates include:

Corn: 92 million acres
Soybean: 88 million acres
Wheat: 48 million acres

“We have to realize these are not survey-based estimates—those will come March 31,” Gulke says. “These are based on economic models historically used by USDA, likely as of prices a couple months ago. It’s interesting that there isn’t much of a change from last year.”

He says we will need more than 88 million acres of soybean to meet global demand due to South America’s crop shortfall.

We are going to not run out of soybeans, USDA indicates.

“But how we get there is still in question,” Gulke says. “Will we do that with $17 or higher soybeans curbing demand? It seems someone or lots of people will use less.”

The financial and commodity markets reacted strongly to word that Russian President Vladimir Putin had launched military action in Ukraine earlier this week.

This caused end users, importers and exporters to scramble to cover their new price/logistics financial risk, Gulke says.

“This will significantly change the global flow of grain,” he says. “Ukraine produces a lot of corn and a lot of wheat. The ramifications of this will not go away anytime soon. We’re going to have to deal with Russia, and, of course, they are tied to the hip of China because of their 5000-word agreement.”

In addition, China is relaxing restrictions on imports of Russian wheat.

“China has said they’ll take the wheat that they have if other people won’t,” Gulke says. “That says they are going to get protein one way or the other and won’t need as much corn from the United States.”

Gulke says weeks like this one show just how volatile grain markets can be.

“Things are never dull in agriculture,” he says. “We must be ever cognizant of global events; we live in a really complex world.”

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Jerry Gulke: 10 Thoughts on the Paradigm Shift in Global Agriculture

The Gulke Group conference is set for March 17-18 near Chicago. Speakers will cover weather, fertilizer and market outlooks, and special guest Dr. Mark Jekanowski, Chairman, WASDE, who just concluded the Annual Outlook Forum. If you’d like to attend, visit GulkeGroup.com for more information.

Check the latest market prices in AgWeb’s Commodity Markets Center .

Get in Touch with Jerry

Do you have questions for Jerry? Contact him at info@gulkegroup.com or 312-896-2090 or GulkeGroup.com

Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group Advisory Services. Disclaimer: There is substantial risk of loss in trading futures or options, and each investor and trader must consider whether this is a suitable investment. There is no guarantee the advice we give will result in profitable trades. Past performance is not indicative of future results.

Jerry Gulke: The Best of Times, The Worst of Times

Tue, 25 Jul 2023 14:56:36 GMT

The grain markets posted some of their largest weekly gains ever this week.

May corn was up nearly $1 and December corn prices up 48¢, for the week ending March 4. May soybean prices were up 76¢, and November soybean prices were up 36¢.

While those gains are impressive, the wheat market is where we saw the major fireworks. Kansas City wheat prices were up around $3 for the week, Chicago wheat prices were up $3.50 and Minneapolis wheat prices were up close to $2.

“This week gave risk management a whole new meaning,” says Jerry Gulke, president of the Gulke Group . “This morning at 7:30, every Chicago wheat contract was limit up all the way to next March of 2023. I’ve never seen that happen before.”

The ongoing crisis in Ukraine is fueling these higher wheat prices—pushing them to at least a 14-year high .

“Ukraine and Russia supply the world with 25 to 35% of all the wheat,” Gulke says “If some of their exportable supplies disappear, some people will go without. And we’ve got anybody that’s 18 years to 60 years old in Ukraine carrying a gun, so they’re not planting the crops.”

In addition, Gulke notes, Russia supplies two-thirds of all the fertilizers exported to the world, which has global implications for planting spring season across the globe.

Livestock Implications of High Grain Prices

While the grain markets were dramatically higher this week, feeder cattle, live cattle and hog prices were all down several dollars for the week.

“As a grain producer, I like to know what the guy that’s buying grain is making any money at it,” Gulke says. “Because if I get too expensive, then they can’t make money and won’t be a buyer down the road.”

The key moving forward, he says, will be if the livestock industry is seeing demand reduction or demand destruction.

“I remember one of our clients saying in the past that there’s nothing you can do with $7 corn — you can’t make ethanol of it, and you can’t feed it to an animal and make any money at it,” Gulke says.

WASDE on the Horizon

On Wednesday, March 9, USDA will release its monthly World Agricultural Supply and Demand Estimates (WASDE) and Crop Production reports.

Gulke says average trade guesses for the reports include:

Corn ending stocks of 1.466 billion bushels, which would be down 74 million bushels from the February report.
Soybean ending stocks of 279 million bushels, which would be down 46 million bushels from February.
The Brazilian soybean crop near 129 million metric tons (MMT), down about 5 MMTs from its February projection
Argentine soybean production near 43 MMTs, down 2 MMTs.

“Common sense says you have to lower the Brazilian crop 5 MMT,” Gulke says.

Read More
Jerry Gulke: 10 Thoughts on the Paradigm Shift in Global Agriculture

Get in Touch with Jerry

Buckle Up: The Perfect Storm Could be Brewing for Volatility to Explode in the Grain Markets Next Week

Fri, 21 Jul 2023 22:15:07 GMT

From growing tensions between Ukraine and Russia to the forecast for hot and dry weather across the Midwest, grain prices shot higher through midweek.

On Monday, Russia said it would halt participation in the year-old grain deal that was brokered by the U.N. The deal is important, as it allows Ukraine to export grain through the Black Sea. Just hours before, a blast knocked out Russia’s bridge to Crimea. Moscow called it a strike by Ukrainian sea drones.

Following the announcement to halt the deal, Russia also stepped up attacks on Ukrainian grain ports, while also issuing a vital warning later in the week: ships heading toward Ukrainian ports in the Black Sea will now be considered to be carrying military cargo, opening the door for more attacks.

Immediately following the escalation on Monday, grain markets were slow to respond. Chip Nellinger of Blue Reef Agri-Marketing says there’s been so much changing narrative about whether the grain deal will be renewed or not, but the deal has continued to be renewed. He thinks that’s why traders were slow to respond to the news.

“I think that there’s been so much back and forth about whether the black sea grain corridor is going to be renewed by Russia, the market has become a little bit weary,” says Nellinger. “And then Russia came out and said they were not going to renew that. And the market didn’t react to that, because I think a they thought maybe that there was still a chance. But I think by the middle of the week, it was apparent that Russia was playing hardball, they started attacking some Ukrainian ports and said they may look to fire upon some of these ships that are moving into the Black Sea towards Ukraine, and that really is what spooked the markets and got the algos coming in to the long side on the headline.”

Musical Chairs of Short Grain Supply

Nellinger says the funds have been short in the wheat market, and even though it was slow to react, the funds continue to buy breaks in the market as the situation in Ukraine and the Black Sea remains volatile. But there are still questions on who will see short supplies due to the interrupted flow of grain.

“I think the rally we’ve seen is the musical chairs that’s going to be played here in regards to who’s getting shorted with supply,” says John Payne of hEDGEpoint Global Markets. “On the global balance sheets, the loss of the Ukraine crop, at least the export terminals, isn’t a huge deal. What is a huge deal is if we’re going to lack any commercial shipments at all in the Black Sea.”

Payne says there is one port in the southern part of Ukraine that will be open, as well as others in the southeastern part of the Black Sea.

“At this point, I think that’s the uncertain events, is figuring out how is this going to play out as we move forward,” he says. “I don’t think we’re going to see $14 Chicago wheat, but I think you could have some knee jerk reaction in the nearby contracts.”

Nellinger says a massive drop in Ukraine’s production, compared to a year ago, was already a known fact.

“In my mind, it’s more about Russia, and they supposedly have a big crop. 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 Indian and China have been big benefactors of Russia’s grain.

High Heat and Little Rain Forecasted for the Midwest

While the uncertainty in Russia and Ukraine were the big market movers earlier in the week, by mid-week, the U.S. markets were looking at weather.

Eric Snodgrass of Nutrien Ag Solutions says the heat that’s been parked in Texas and across the Southwest this month, will barge into the Midwest starting on Wednesday. He says it’ll push into the central United States and the Plains.

“And we’re going to be talking about temperatures that are going to be in the mid upper 90s as far north as Minnesota and the Dakotas, and then possibly, there’s going to be some pockets in Missouri, Illinois, Nebraska, Kansas, that are going to be over 100 degrees Fahrenheit,” says Snodgrass. “And so we always worry it’s going to last. Is this going to be a two to three day event? Or is there going to be a 10-day event or a 30-day event?”

He says the current thinking is the heat starts on Wednesday and then lasts through the weekend. There are some forecasts pointing to 105 degree heat in Iowa.

“But the question we have is, there’s humidity in this pattern. So, will there be storms that blow up in the middle of this and bring some cooler weather? That’s a possibility,” he says. “So, I would call it hot, hot with a lot of isolated storm activity. There’s going to be winners out of this, and there’s going to be a larger area that’s going to see some crop damage.”

Nellinger also says the duration of the heat is the biggest question for the markets.

If it’s three days of 100 degrees, and then you get some rain on top of it, probably not that big of a deal. If it’s three weeks of 100-degree temperatures, like some of the weather models are hinting at, and no rain or the rain has pushed north because of the high-pressure ridge, then you’re talking about heat and dryness at the exact wrong time. And it’s going to affect both corn and soybeans that will be starting to flower,” says Nellinger.

Nellinger thinks the volatility that happened this week in the markets, is only going to expand next week, depending on what the weather forecast says.

Payne says the forecast for next week caused the insurance cost for short-term options to skyrocket.

“That is kind of a front running event where if this weather would really turn dry in August, you could see some short covering, obviously, but I think the funds have moved out to a general degree. It really comes down to soybeans,” says Payne.

Payne says he doesn’t think the corn supply satiation is as threatening s the soybean crop.

“The lack of acres puts a lot of stress on whatever we’re going to have the crush numbers come in at. While they’re smaller, crush margins are really good. So, a break in the price isn’t going to help unless you get soy oil and soy meal falling with it, and right now you have meal up and oil up.”

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)

The 5 Fundamentals That Could Still Rally Wheat Prices

Tue, 23 May 2023 15:14:11 GMT

Last week was full of both bullish and bearish news for the wheat market. As winter wheat harvest begins across the country, one market analyst thinks the lower domestic wheat production also changes the dynamics in the wheat market.

While the Kansas Wheat Tour found a disappointing winter wheat crop , news of the U kraine Black Sea grain deal extension extended for two more months also hit the market.

The Black Sea grain deal was facing an uncertain outcome, as Russia demanded concessions in order to extend the deal, However, Turkish President Tayyip Erdogan said on Wednesday, one day before Russia could have quit the pact over obstacles to its grain and fertilizer exports.

This week, there’s a new twist. According to Ukrainian Prime Minister Denys Shmyhal, one of Ukraine’s Black Sea ports halted operations because Russia was reportedly refusing to allow ships through.

UKRAINE'S BLACK SEA PORT OF PIVDENNYI HAS HALTED OPERATIONS BECAUSE RUSSIA REFUSES TO ALLOW SHIPS THROUGH - UKRAINE DEPUTY MINISTER
— First Squawk (@FirstSquawk) May 23, 2023

At the same time, harvest is still a month away across parts of Kansas, and the Wheat Quality Council tour found an abandonment of 26.75% versus USDA’s current projection of 18.5%.

Arlan Suderman of StoneX Group says with all the news hitting the wheat market, risk management is vital this year, especially with both the downside and upside risks.

“Is the hard red winter wheat crop short? Absolutely it is. And it’s shorter than what the USDA indicated. It’s shorter than what the trade said,” says Suderman. “If you look at the six analog gears for crop condition ratings, five of those six years saw the hard red winter wheat crop gets smaller ahead of the final report on September 30.”

Suderman says while USDA’s crop projections could shrink, he says news of just how overpriced the hard red winter wheat is in the U.S. created a bearish sentiment last week.

“We have milling wheat from Europe coming into the United States, and it pencils out right into the interior of the United States. And so that is a big psychological impact on the market. It’s been going on for 90 days, but Bloomberg finally picked up the story and kind of woke up the market to the reality. And that pulled the legs out from underneath the only real bull story we had in the grain and oilseed complex right now,” says Suderman.

Can the wheat market still get rallies? Suderman says that’s certainly possible, but he says it now emphasizes just how much world markets matter in wheat. And he says it’s these five factors that will play into prices in the months ahead:

Whether it rains in Argentina so farmers can get their winter wheat crop planted.
Whether El Nino cuts the size of the Australian crop.
Whether it stays dry now in the U.S. spring wheat belt.
How dry it gets in Russia’s spring wheat belt.
Weather conditions in Canada’s spring wheat belt.

“All of those things matter a whole lot more now,” says Suderman. “So it’s possible, not necessarily that it will happen, but it’s possible that we could see a rally based on one of those factors.”

The United Nations said last week that the grain deal renewals, including the one last week, is helping stabilize the market and reduce volatility. The group noted that global food prices had fallen 20% since hitting all-time highs in March 2022.

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

Kremlin Now Says Outlook for Black Sea Grain Deal is 'Not so Great'

Wed, 12 Apr 2023 13:37:19 GMT

The Kremlin on Wednesday said the outlook for the landmark U.N.-brokered Black Sea grain deal was not great as promises to remove obstacles to Russian exports of agricultural and fertilizer exports had not been fulfilled.

The grain deal is an attempt to ease a food crisis that predated the Russian invasion of Ukraine, but has been made worse by the most deadly war in Europe since World War Two.

The agreement, due to expire next month in its current form, was first signed by Russia, Ukraine, Turkey and the United Nations in July last year and twice extended. On paper, it allows for the export of food and fertilzser, including ammonia, from three Ukrainian Black Sea ports.

While the West has not placed sanctions on Russia’s food and fertilizer exports, Moscow says they are compromised by obstacles - such as insurance and payment hindrances - that it says must be removed for the deal to work properly.

Kremlin spokesman Dmitry Peskov said on Wednesday that the current agreement was not working for Russia, despite some efforts by the United Nations to get the parts of the deal relating to Moscow’s interests implemented.

“No deal can stand on one leg: it must stand on two legs,” Peskov told reporters. “In this regard, of course, judging by the state of play today, the outlook (for its extension) is not so great.”

Russia and Ukraine are two of the most important producers of agricultural commodities in the world, and major players in the wheat, barley, maize, rapeseed, rapeseed oil, sunflower seed and sunflower oil markets. Russia is also dominant on the fertilizer market.

More than 27 million tonnes of grain and other foodstuffs have been exported from Ukraine aboard 881 outbound vessels since the Black Sea Grain Initiative began in August, official data shows.

Related Stories:

Is Russia Taking a Page Out of China’s Playbook By Working to Take Control of Its Grain Industry?

Clinton Griffiths: When War Hits Home

Mon, 20 Mar 2023 12:10:22 GMT

I can still feel the well-tread Berber carpet digging into my shin as my grandfather spoke softly to my siblings and I one summer morning. I might have been 10, plus or minus two years, completely enraptured by his every word.

Cecil Moon, a New Mexico wheat farmer and cattleman, slowly rubbed his callous-covered hands as he told us about his time serving in WWII. I felt the sway of the boat as he shipped over. I could smell the fields next to where he marched and heard echoes of gunfire in the distance as he poured this tightly bottled experience out into the room.

Later, my mom said it was the only time she ever heard him speak about his time in the service.

AN UGLY BUSINESS

War is an ugly business. As I sat and listened to Howard G. Buffett share his experiences traveling in Ukraine , I couldn’t help but be drawn back to that day in my childhood. Hearing the stories of families separated by war, livelihoods upended and homes destroyed, makes you reflect on the collateral costs that follow.

We are blessed to have men and women willing to serve and protect this nation for our families. We also have people, as you’ll read within the covers of this magazine, willing to use their success at home as a bridge to helping those most susceptible.

Howard G. Buffett works all over the world in some of its most dangerous corners. He also brings a camera along to document the realities of life in the midst of turmoil. He did the same in Ukraine.

Among the photos of mass graves and devastation, it was this picture of the young Ukrainian girl below that stopped me cold. She’s sitting on her suitcase, probably with all of her earthly belongings, as she savors one tiny moment of rest. Her parents were likely rushing to pack and leave as refugees before the invasion got worse. Her life will never be the same.

HUMANITY PAYS THE COST

As Americans, we are free to debate the budgets, the policies, the processes and purpose of our role in this conflict. I can’t, however, ignore the humanity paying the cost.

Our fellow farmers, like my grandfather, fighting for their country, are worth our prayers and our support as an agricultural community.

Hopefully, for sake of those caught in the crossfire, like this young girl, the one-year anniversary will be the last anniversary.

Watch an “AgDay” series on Howard G. Buffett’s work in Ukraine .

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.

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.

Do Fundamentals Even Matter to the Commodity Markets? A Key Lesson From 2022

Tue, 03 Jan 2023 20:29:26 GMT

As the new year brings fresh market action, volatility continues to be the main theme to enter the new year. The main market trends continue to dominate the markets to kick off 2023, and analysts say that’s why there are some keys lessons to keep in mind from 2022.

Both Chip Nellinger of Blue Reef Agri-Marketing and Arlan Suderman of StoneX Group reflected on how the markets performed in 2022, and according to Suderman, there are three main things the market taught us last year.

“First of all, we saw geopolitical realignment across the globe,” says Suderman. “And that had to do with China and with Russia, most specifically with Russia, but now China aligning with Russia. And so, who you do business with depends on who you’re friends with a net changes, freight increases – the cost of freight - it decreases the efficiencies of the market and created a lot of anxiety in countries became less comfortable with just-in-time supplies.”

Suderman says as a result, we started to see some countries hoard commodity supplies during the first half of the year, which spurred the run-up in market prices. That also created a tremendous amount of volatility. However, 2022 produced another key lesson in the markets, one in which could carry into 2023.

“And then a third thing is, it was the year of the algos, which totally changed how we use the derivatives markets. Traditional specs stepped aside from the market, especially in the wheat market and some of the others, as well as we saw overall volume spike, but open interest go to multi year lows long term lows,” says Suderman. “So, the market price, the derivatives market, was primarily driven by the algos, which really changed the behavior, the market and the way we approached the market.”

Algos, which is an abbreviated term for algorithmic trading, is also referred to as automated trading and black-box trading. This method of trading is done by a computer program that follows a defined set of instructions - or an algorithm - to place a trade. The trades happen quicker than what can be done by a human trader.

Nellinger has a different take on the overall market action. He says even with the algos having a strong hold of the market, 2022 reminded us fundamentals still matter.

“I think one thing that we learned this year is the market still work, they still are going to, you know, respond to supply and demand and demand fundamentals,” says Nellinger. “They may become inefficient at times because of the algos and the massive amount of money flowing in and out of our markets, but that provides opportunity at times to both on the upside and the downside.”

Related Story: Jerry Gulke: 2022 Was a Year for the Ages, What Awaits in 2023?

Nellinger points out the markets still can overreact to both sides of the market, but he says it’s all in response to the fundamentals.

“We’ve seen that, you know, across the board on corn, beans and wheat at different times of the year,” adds Nellinger. “We’ve seen the market respond to tightening supplies and increasing demand. That is going to be there going forward. It’s been the bellwether to our markets and what makes them function in the past. And in spite of a lot of algo money and speculative money coming in and out of our markets at times, the fundamentals still matter.”

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“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.

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NEVER AGAIN

2023 AND BEYOND

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