The war in Ukraine changes Shay Richter’s plans for his family farm in Montana. While wheat exports are dwindling from the Black Sea region, bringing prices to record highs, Richter plans to plant more grain and less chickpeas, lentils and peas this coming spring.
“With the way prices have gone up here in the last week,” Richter said, “I think the guys are more excited about the farm than they were three or four months ago.”
But hopes that the U.S. agricultural exporting powerhouse will stop a crisis emerging in global wheat markets are likely to be out of place, experts said. $ 13.40 per cookAn all-time record.
The United States was the second largest exporter of wheat in the world after Russia in 2020, while Ukraine was ranked fifth. Russia’s attack on Ukraine disrupted wheat shipments from both countries, raising concerns about Food shortages In countries that depend on imports.
The global grain market usually responds to shortages in one part of the world by tapping other regions that have a surplus. When Russia banned wheat exports after a severe drought in 2010, U.S. shipments helped boost slack.
But any response from the U.S. this time will take time. After a poor crop last year, domestic wheat stocks are at their lowest level in 14 years, according to the U.S. Department of Agriculture. Farmers have already sown 34.4 million dunams With winter wheat, which accounts for most of U.S. production, and there are a Aggravation in drought In important countries of winter wheat like Kansas.
The crystallization of the grain supply led to a discussion on the release of protected acres under the Federal Land Conservation Plan for cultivation. Zach Ducheneaux, director of the American Farm Agency, recently said That “we follow world events,” but nothing has been decided.
“There are only limits on how many farmers can respond [to high prices] Here in North America, “said Scott Irwin, an agricultural economist at the University of Illinois.
Bruce Rodley, a winter wheat farmer in southern Illinois, said there is no chance he and his brother will increase their acreage next fall because they wanted to persevere in a crop cycle that does not harm soil health. In addition, even with high wheat prices, inputs also cost more. This is a “double-edged sword,” Rodley said.
The price of diesel, which farmers have to refuel their tractors, trucks and harvesters, has soared to nearly $ 5 per gallon. Agricultural land prices in much of the U.S. grain belt rose about 20 percent last year, according to surveys by the Federal Reserve’s Midwestern branches, and put a burden on farmers who rent out their land.
Meanwhile, fertilizer costs are “skyrocketing right now,” said Michael Magdowitz, an analyst at Rabobank. The U.S. imports 22.4 percent of its nitrogen and 11.3 percent of its potash fertilizers from Russia and Belarus, according to researchers at the International Institute for Food Policy Research.
The prices of spring wheat that will be planted soon have also risen, which is an incentive for farmers to expand the crop. But Cindy Johnson, another farmer in Montana and president of the Montana Farm Federation, said she would not add to the planned 2,400 acres of spring wheat because of the higher costs for fertilizer, fuel, seeds, chemical sprays and equipment.
She is cautiously optimistic about high wheat prices, but her profits will depend on the size and health of her crop: “All the answers will come when it rains or not.” Half of Montana is in In an extreme form.
For U.S. farmers who have crops left to sell from last year, wild price moves have made marketing more challenging. [prices] Changing rapidly, “said Joseph Glover, a senior research fellow at IFPRI and a former chief economist at the U.S. Department of Agriculture.
The prices of soybeans and yellow corn have also gone up and are very profitable relative to other crops, Glover said. In some areas it creates an incentive to cultivate more soil with these two crops, which are used more for animal feed and biofuel than for staple food, rather than with wheat.
Cereal prices have been rising against the backdrop of the strongest inflation in the US for 40 years, with the consumer price index rising at an annual rate of 7.9 percent Last month.
“These high prices are not helping the farmer in the long run,” said Sean Kenp, general manager of Pitchford Elevator Company, a grain merchant in Illinois’ leading wheat growing district. Prices can be phenomenal but farmers “will need all this income”.
US farmers’ hands are tied as world braces for wheat shortfall Source link US farmers’ hands are tied as world braces for wheat shortfall