Update on Russian invasion’s affect on U.S. ag and markets

We are continuing to see the impact of Russia’s invasion of Ukraine in the markets.

U.S. futures are under pressure as Russian President Putin is on the verge of hitting Ukraine’s capital.

Chicago wheat futures fell in the overnight trade after hitting their highest since mid-2008, after traders assessed a potential disruption to grain supplies. Corn eased back from yesterday’s eight-month peak, while soybeans dipped as well.

A new analysis shows the invasion should have a minimal impact on the global meat trade, but the lingering volatility in the grains could affect U.S. livestock producers.

The Daily Livestock Report shows high feed and energy costs are negative for U.S. meat producers and will impact their ability to bring more product to the market, which is a bad picture for consumers. Russia, however, is not a major buyer of proteins in the global market. They usually import from Paraguay and Belarus.

The impact on American ag was immediate, but long-term effects remain to be seen.

As we reported yesterday, wheat and corn went limit-up in overnight trade. Oil passed $100 dollars a barrel. Sen. Jerry Moran of Kansas says that farmers are already facing hardships with high prices, but things are about to get worse, via the energy sector.

“Continue to push the Biden administration to change their policies in regard to energy. We need an ‘all of the above’ program, we need to be energy independent,” he states. “In fact, Russia is able to finance this aggression because they sell oil and natural gas to the rest of the world. In the next 24 hours, it is expected that the United States, the European Union, and the United Kingdom will spend $330 million dollars buying 3.5 billion barrels of oil from Russia.”

Senator Moran says that the invasion will also impact diesel and fertilizer prices. He says that Congress needs to come together and increase domestic energy production.

In terms of fertilizer, Sec. Tom Vilsack says that there are many drivers for fertilizer costs. His biggest concern with the invasion is farmers being taken advantage of or companies using the situation to do something unethical.

“It will take some time obviously for the impact of all of this to be understood and felt, but I’m sincerely hopeful that no company out there, whether it’s fertilizer or any other supply that may be impacted by this, will take an unfair advantage of this circumstance and situation, making sure that they don’t use this situation as an excuse to do something that’s not necessarily justified by supply and demand,” according to the Secretary.

He also touched on if the situation will have any implications for U.S. ag in trade in that part of the world, and what USDA is doing in the meantime.


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