Update on Russia/Ukraine conflict’s impact on U.S. ag
Sanctions against Russia are now impacting air and sea traffic, and threatening the flow of raw materials.
Initially, overnight crude oil climbed past $100 dollars a barrel. Since the conflict began a week ago, crude has not closed above 100, but analysts say that today could be the day.
Russia’s currency has now collapsed with the Ruble valued at less than a penny, and of course, all this is weighing heavily on the ag market.
The Russian invasion is being felt across all sectors, but producers are now looking at the potential impact on fertilizer prices.
The U.S. imports most of its potash from Canada, but we do get a fraction from Russia, which supplies a quarter of the global market. That means sanctions on Russia will have ripple effects and farmers will have to pay that global price. There is also a chance Russia could use potash as a countermeasure and withdraw its willingness to trade.
Analysts say that when something changes in another country, it directly affects fertilizer prices in the U.S. because it is an increasingly global market.
The conflict may also curb Ukraine’s ability to export corn and wheat, and that could put U.S. farmers in a good position to help fill the void.
Ukraine still has six million tons of wheat and $13 million tons of corn waiting to be shipped. A data analytics company says that the U.S. could ultimately be called to replace those delayed shipments.
USTR Tai says that it is important we respond appropriately: “This is an area where I know that we are going to have to work very closely to assess where the impacts are going to be, especially when it comes to agricultural trade. We know Ukraine is an agricultural powerhouse, and to think through again, how our trade policies take into account the foreign policy needs, but also our domestic economic needs to ensure that we can be the kind of trading partners that our allies need us to be and how we take care of our own.”
Ukraine is the fourth largest exporter of ag products in the world.