The ground is shifting as we talk.
Russia and Ukraine are the top wheat exporting countries.
The photo was taken by Christopher Furlong.
A grain farmer in Hartney, Man., was watching wheat prices on Friday. The day before, prices spiked because of fears that Russia's invasion of Ukraine would disrupt one of the world's most productive breadbaskets. By Friday, wheat was falling.
The ground is shifting as we talk.
The war in Europe gave him a feeling that the global commodities market was going to go down. He and his family had decided what they were going to plant across their 10,000 acres, but there was still time to change the mix if demand went up for one crop or another.
The gut feeling was to stick with the plan, to resist chasing wild trends in the market. The attack on Ukraine was horrible and happened in a place that didn't seem much different from his farm. If the war was going to create uncertainty, it's best to stick with what you can grow, which in his case is hard red spring wheat, yellow peas and corn.
There are only so many things we can control as farmers, saidPhillips, who serves as the vice-chair for the Grain Growers of Canada.
The invasion of Ukraine is threatening to disrupt the region's exports, further tightening the global supply of commodities and driving up the pace of inflation. The crisis comes at a time when global food stocks are already strained due to extreme weather, such as last year's dry spell in Western Canada. If food becomes more scarce and expensive, it will have an adverse effect on developing nations that depend on Russia and Ukraine for food.
We didn't need this Ukraine thing because we have lots of issues. The board of major grain buyer Paterson Global Foods Inc. is chaired by a former Maple Leaf Foods executive.
According to a report this week, Russia and Ukraine account for 29 percent of the world's wheat exports and 19 percent of corn exports. The two countries are major global suppliers of corn, canola and sunflower oil.
The invasion appears to be cutting off Ukraine's exports to the rest of the world. As of Friday morning, key Ukrainian export ports weren't operating.
The uncertainty drove up wheat futures at the Chicago Board of Trade, which hit a level not seen since 2008 on Thursday before falling on Friday. Corn hit an eight-month high on Friday.
Karl Setzer, a market analyst with Agrivisor, said that we got into oversold territory on the charts and posted a big correction.
Jean-Philippe Gervais, chief economist at Farm Credit Canada, said the price jump on Thursday was typical of overreacting from the markets.
Even if crop prices go up this year, agriculture leaders warn that the war will drive up fuel and fertilizer costs, since natural gas is a main input in the production of fertilizer. The cost of borrowing will go up if central banks raise interest rates. Gervais said that it was concerning for a capital-intensive business like farming, where many operations depend on debt to finance land and equipment.
Farmers in Western Canada may be hesitant to lock in prices for their crops early in the year. Poor production volumes forced some farmers to pay out of pocket to buy crops on the open market.
Todd Lewis, interim vice-president at the Canadian Agriculture Federation, said western farmers are banking on healthy rains to bounce back from last year.
Email: jedmiston@postmedia.com
All Rights Reserved © 2024
