Fallout from the Russia-Ukraine conflict continues to rattle commodity markets. Last week on Saturday, India, the world’s second largest wheat producer, behind Russia, announced an export ban on the crop, based on concerns that India’s food security is under threat. Wheat supplies were already in question because of the Russian-Ukraine war that shut off Ukrainian wheat exports and led to an embargo of Russian wheat, the world’s largest exporter of the grain. There’s also concerns about the U.S. wheat crop, since, much of southwest Kansas has gone nearly 300 days with little precipitation,” according to information from the Kansas Wheat Innovation Center in Manhattan, Kansas, and some areas have had less than an inch of rain since wheat was planted last fall.”
Corn prices were also bullish on futures markets after concerns about the late planted crop led the USDA to cut yield estimates for the 2022 crop by 10 bushels per acre late last week. There are still thousands of farmers in the Midwest who have not completed planting corn fields that are usually finished by early May.
Since Highly Pathogenic Avian Influenza started this spring, the disease has killed or led to the culling of almost 38 million chickens and turkeys in the U.S., and has killed or disabled thousands of wild birds including American Bald eagles, owls and water fowls. The disease is impacting both poultry and egg production and the price of eggs has steadily risen over the past couple of months as the numbers of egg laying birds have been reduced as egg laying flocks have been culled because of HPAI disease infections.
According to the Federal Reserve Bank of Chicago’s May Ag Letter, Corn Belt agricultural land values in Illinois, Indiana, Iowa, Michigan and Wisconsin collectively increased 23% from April 2021 to April 2022. This data comes from survey responses by agricultural bankers in the region, which make up the Seventh Federal Reserve District. The survey also found that cash rental rates for crop acres in the District have increased 11% from 2021 to 2022.
Last week, the US Climate Prediction Center reported that the outlook hints at “a re-strengthening of La Nina conditions again this fall and upcoming winter.” The chances of La Nina returning between November of 2022 and January of 2023 have climbed to 61%, that’s up from the April estimate of a 53% chance of a comeback. If predictions are correct, and LaNina returns, it would be for the third winter in a row, which is only the third time that’s happened since 1950. La Nina three-peats occurred between 1973 and 1976 and from 1998 to 2001, according to the National Oceanic and Atmospheric Administration. La Nina winters have often favored dry conditions in the U.S. Southwest.
Farm Progress Magazine recently reported that Russian military forces stole 27 pieces of farm equipment worth $5 million from the Agrotek dealership in Melitopol, Ukraina. After they shipped combines, tractors and planters from Ukraine to Chechnya in Russia, they determined that the equipment had been remotely disabled and unless the software can be hacked, won’t be of any use to the Russian government.
1st Century BC writer Publilius Syrus wrote, “I often regret that I have spoken: never that I have been silent.”
