Photo courtesy of Envato Elements
From staff reports
With Ukraine under siege from Russia, wheat exports have fallen significantly from the Black Sea region, driving wheat markets to record highs. A majority of the U.S. wheat is planted and although prices are good, they are being offset by increasing costs for fertilizer and fuel. In order for American farmers to respond to dwindling wheat supplies, it will take time as U.S. wheat stocks are at their lowest level in 14 years, according to the U.S. Department of Agriculture. due to long-term drought in much of the U.S. the last few years. ‘There’s just limitations on how much farmers can respond [to high prices] here in North America,’ said Scott Irwin, an agricultural economist at the University of Illinois. Furthermore marketing last years wheat is more challenging as prices are fluctuating so drastically.
Ryan Dezember reported recently in the Wall Street Journal that, “Russia’s invasion of Ukraine threatens a big portion of the world’s wheat supply and has sent prices on a dizzying ride to new highs and the sharpest drop in years.”
“Still, the benchmark U.S. price, at $11.07 a bushel, is 72% higher than a year earlier and analysts expect the war will keep wheat high,” the Journal article said.
U.S. grocery store prices will reflect the higher prices for wheat, but also of concern is some countries not being able to get the imports they rely on to meet their grain needs. Not to mention global stocks of oils made from palm, soybean, corn and sunflowers are at their lowest level since 2016/2017, with the global oilseed crush reduced by 7 million metric tons. They were already low before the Russia-Ukraine war due to lack of production in other countries, such as Canada, Europe, Russia, and Ukraine between 2019 and 2021 and now are even lower because of the war in the Black sea.