The U.S. wheat market has been turned upside down by Russia’s invasion of Ukraine, with wheat futures soaring so high so fast that many buyers are backing off, leaving farmers with a diminished market even though they have plenty of crops to sell. Meanwhile, a shortage of fertilizer threatens future crops.
Local wheat prices rose about 30% to nearly $12 a bushel in some U.S. farming communities following Russia’s invasion — the highest in decades, Reuters reported. Prices climbed so quickly that many customers along the supply chain — including local farm cooperatives, grain elevators, flour millers and exporters — stopped buying crops because they weren’t sure they could resell them for a profit.
Other buyers got spooked by upheavals in normal hedging strategies. For now, many are delaying purchases until more is known about how the Russia-Ukraine conflict will play out. Russia is the world’s leading wheat exporter, while Ukraine is a top supplier of both wheat and corn.
“More than anything, the market is just in a panic,” Andrew Jackson, a Kentucky grain merchandiser, told Reuters.
This in turn has created a sense of panic for many American wheat farmers who have plenty of crops to sell but not enough buyers.
The problem has been complicated further by worries of a fertilizer supply shortage. Russia is a major supplier of fertilizer to the world — and it is no longer selling to the West, Fox Business reported. Of the estimated $10.3 billion worth of crop fertilizer, the United States imported in 2021, about one-tenth came from Russia.
Russia’s fertilizer ban to the West is slated to last until the end of 2022, which will squeeze an already tight supply. But the greater concern for many farmers is how the ban will impact future supplies and prices.
“If things don’t settle down and suppliers don’t want to purchase from Russia for 2023, that could put a real tight squeeze on the fertilizer market — even next year make it even worse,” Mike Gunderson, a wheat, soybeans and corn farmer in northwest Minnesota, told Fox Business.
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