Mounting tensions between Russia and Ukraine should be on the radar of Nebraska corn and wheat farmers. While seemingly far removed from Nebraska, a Russian invasion of Ukraine could have repercussions for corn and wheat markets, impacting Nebraska producers.
Ukraine is a major competitor to the U.S. in world corn markets along with Brazil and Argentina. It is projected to be the fourth-largest corn exporter this marketing year with exports of 33.5 million metric tons. Much of Ukrainian corn exports go to China. Last week rumors suggested China is already shopping around for U.S. corn in the event Ukraine can not satisfy its commitments. At the same time Russia is the world’s largest wheat exporter, estimated at 35 million metric tons and Ukraine is the third-largest at 24.2 million metric tons. Russia and Ukraine together account for 29 percent of the global wheat exports. Much of the wheat goes to the Middle East and Africa.
A Russian invasion of Ukraine could interrupt grain exports from both countries. Port infrastructure, storage facilities, and transportation routes could all be affected causing disruptions. Additionally, sanctions on Russia imposed by the U.S. and other countries could restrict its exports. Depending on the length and intensity of the conflict, world grain markets could be upended with prices of corn and wheat both experiencing volatility. And, a conflict could have negative impacts on the fertilizer markets. Russia is a player in fertilizer markets, producing nitrogen, phosphurus, and potash and is a major exporter of ammonium nitrate.
Talks between Russia, Ukraine, the U.S., and other countries continue and will hopefully diffuse the situation. If unsuccessful though, producers should expect more volatility in world grain markets.