The Impact of Russia’s Invasion of Ukraine on US Ag Markets After One-Year Anniversary
It was one year ago on Feb. 24, 2022 that Russian tanks began rolling into Ukraine. It’s a war that many thought would only last days or weeks—but has lasted now for 12 months.
“Quite honestly I would not be surprised 12 months from now if we’re still talking about it,” says Karl Setzer, Commodity Risk Analyst with AgriVisor.
When the Russian invasion first began, commodity prices shot up significantly. But, Setzer says the ag markets have since stabilized.
“It’s definitely been muted here and the reason being is that the knee-jerk reaction was we’re not going to get any wheat and that’s where 20% of the world’s wheat supply comes from. Corn will also be shut off. Now, here 12 months later, it’s the opposite. As a matter of fact, there is so much grain flowing out of the Black Sea region from Ukraine into the European Union, the EU wants it shut off because it’s just killing their domestic market.”
Setzer says that the war’s impact on Ukraine’s corn and wheat exports weren’t nearly as dire as first predicted.
“More of the crop got out and more was harvested last year. We’re going to see some decent production this year,” according to Setzer. “It’s not going to be back to pre-war levels, but it is it’s going to be enough that when we add it into the rest of the global supply, it’s going to be a fair amount.”
But, he also says that the war is still creating huge challenges for Ukraine’s grain exports.
“Vessel loadings have slowed. Only two-and-a-half vessels are being cleared from inspections per day. There has been some chatter that Russia is going to shut down the corridor. I don’t think Russia is going to do that. Russia is upset with the sanctions against them, and we knew they would be. The thing is Russia doesn’t want any new sanctions either, so that’s going to help keep that corridor open.”
Setzer adds that the ag markets have also stabilized because of expectations that this war could last for quite some time.
“This could be a long drug-out war. When you have that, the market does tend to just kind of look away after a bit,” says Setzer. “That has started to happen here barring some huge Black Swan event—and when you’re dealing with countries like Russian and Ukraine, you cannot rule that out.”
Grain exports out of Ukraine are down nearly 29-percent compared to this same time last year right before Russia’s invasion.