Russian and Ukrainian wheat is not easily replaced. Inventories are already tight in the United States and Canada, according to the United Nations, while Argentina is limiting exports and Australia is already at full shipping capacity. Over the past year, wheat prices are up 69 percent. Among other major food exports of Russia and Ukraine, corn prices are up 36 percent and barley 82 percent.
The war also threatens another longer-term shock to the food markets: a shortage of fertilizer.
Matt Huie, a farmer near Corpus Christi, Texas, said that skyrocketing prices had already forced him to stop applying fertilizer to the grazing fields that nourish his hundreds of cows, assuring that they will be skinnier come slaughter. Now he is worried he will have to also reduce fertilizer for his next corn crop, which would slash its yield. “We’ve gotten into uncharted territory,” he said.
Russia is the world’s largest fertilizer exporter, providing about 15 percent of the world supply. This month, just as farmers around the world prepared for planting, Russia told its fertilizer producers to halt exports. Sanctions already were making such transactions difficult.
Sanctions also have hit Russia’s closest ally, Belarus, a leading producer of potash-based fertilizer, critical for many major crops including soybeans and corn. But even before the Ukraine war, Belarus’s fertilizer exports were blocked because of sanctions over its seizure of an expatriate dissident who had been a passenger in a Ryanair jetliner forced to land in the country.
In another ominous signal to fertilizer customers, earlier this month European fertilizer producers said they were slowing or halting production because of soaring energy prices. Many fertilizers are made with natural gas.
The world’s major fertilizers have now more than doubled or tripled in price over the past year.
Brazil, the world’s largest producer of soybeans, purchases nearly half its potash fertilizer from Russia and Belarus. It now has just three months of stockpiles left. The national soybean farmers association has instructed members to use less fertilizer, if any, this season. Brazil’s soybean crop, already diminished by a severe drought, is now likely to be even smaller.