The Russian invasion brought devastation to Ukraine, but uncertainty and volatility fueled by this conflict are rippling through U.S. and Texas agriculture markets.
Texas A&M AgriLife Extension Service economists said both Russia and Ukraine do not represent major destinations for U.S. commodities, ranking 56th and 80th, respectively. However, the conflict’s impact on global trade, trade alliances and infrastructure could ripple throughout U.S. sectors in the near- and long-term future.
Russia imported between $1.2 billion and $1.6 billion of U.S. agricultural products annually until imports fell to around $200 million to $300 million over the last five years, following its invasion of Crimea.
David Anderson, Ph.D., AgriLife Extension economist, Bryan-College Station, said this type of conflict creates a “factor of chaos.” The invasion may not directly impact U.S. supply chains, but it will likely disrupt specific sectors, commodities and products as well as create uncertainty, which typically leads to market volatility.
For example, Anderson said the invasion and subsequent sanctions against Russia could further complicate U.S. fertilizer supplies and prices. He noted one major fertilizer product component comes from a Russian-based company.
Anderson said this type of conflict directly impacts lives in that region, but it also creates worry and uncertainty throughout all sectors and markets that ripple through the U.S. economy and many other countries to varying degrees.
“We are blessed to live in a big, diverse nation where we produce an exportable excess of many basic agricultural commodities,” Anderson said. “We do import a lot of fruits and vegetables and coffee, but none of that is coming from Ukraine or Russia.”
Ukraine, Russia conflict and wheat
Mark Welch, Ph.D., AgriLife Extension small grains economist, Bryan-College Station, said the futures grain markets, from wheat to grains for livestock feed, will likely be affected most by the invasion. Ukraine and Russia together are expected to account for about 30% of global wheat exports in the current marketing year.
On Monday, Kansas City July wheat contracts, which represent harvest contracts for Texas producers, fluctuated wildly but were expected to trend higher, Welch said. Corn and soybean prices were also trading higher.
“We are pretty deep into the current marketing year for wheat, which ends May 31, so I do not know how much more wheat is left to be shipped in the next few months,” he said. “In that respect, the timing of this invasion may limit short-term impacts. Certainly, damage to port infrastructure or shipping restrictions in the Black Sea will slow trade and make it much more expensive.”
China announced it is open to grain shipments from Russia. This would provide an outlet for Russian grain sales and help China meet its grain import needs.
Much like what happened during the tariff war between the U.S. and China, trade alliances and flows may shift, Welch said.
“It’s really tough to say right now because there are more questions than answers,” he said. “Uncertainty fuels volatility, and when commodity supplies tighten, any disruption to the market can make an impact.”
Cattle, poultry and pork
Anderson said Ukraine and Russia will have very little direct impact on U.S. protein markets, but the conflict could impact some trade sectors indirectly, including protein production.
According to a CME Group’s Daily Livestock Report following the invasion, the impact of restrictions on Russian protein purchases in the world market are likely to have no impact on global trade of those items.
Russia once relied on imports for proteins like pork, poultry and beef, but has reduced its dependence by increasing domestic production. In 2010, Russia imported around one-third of its pork, but increased its production by 26% and is now a net exporter of pork.
In the early 2000s, more than half of Russia’s chicken was imported, but by 2010 imports dropped to 27%. Last year, Russia imported 5% of the poultry it consumed, but also exported the same amount.
Beef has been more difficult to secure because of land requirements, know-how and domestic preference, according to the CME report. Russian beef consumption has fallen 32% since 2010, and much of its beef imports come from neighboring ally Belarus.
AgriLife Extension district reporters compiled the following summaries:
Conditions were windy, cold and damp with below normal temperatures. Most counties reported short soil moisture levels. The district experienced heavy frosts and some freezing rain. Rainfall amounts were light and soil moisture levels remained dry. Cold temperatures slowed winter wheat development. Winter oat fields have been frequently and heavily frosted since the start of the year. Some fields were mostly killed off or were severely delayed to heading time. Stock tanks held adequate water reserves. Livestock were still being fed supplemental feed and in fair condition overall. Pastures remained dormant but were being sprayed with preemergence herbicides. A warmer trend was forecast for the upcoming week and was expected to trigger corn plantings.
Icy weather and low temperatures in the teens were reported. Quarter- to egg-sized hail and up to 2 inches of rainfall was reported in Wise County. The hail damaged roofs, windows, vehicles and some wheat fields. Producers were feeding heavy rations of hay, and supplies were tightening. Moisture from the cold front should help wheat a little. Many wheat fields had not emerged as yet. One county reported the freezing rain amounted to one half of an inch. Weather prevented farmers from shredding stalks and other fieldwork.
Frequent cold fronts disrupted corn planting in many parts of the district, leaving producers to wait on warmer weather or fields to dry out. Where conditions allowed, some corn was planted and several counties in southern areas reported corn was already up. Some fertilizer was applied to fields. Row-crop field preparation continued. A small amount of grain sorghum was planted. Rangeland and pasture conditions continued to deteriorate with livestock showing signs of reduced nutrition. Hay feeding and protein supplements continued. Livestock markets were good.
Recent rainfall helped relieve some drought stress in most of the district, but counties such as Cherokee, Houston and Smith were still in desperate need of rain. Ponds and creeks remained low. Pasture and rangeland conditions were very poor to fair. Subsoil and topsoil conditions were adequate. Clover planted for winter pastures was starting to produce. Producers fed a tremendous amount of hay and grain during the cold front. Livestock were in fair to good condition with supplemental feeding taking place. Cattle market prices were lower. Producers were scrambling to purchase chicken litter for fertilizer as there seemed to be a shortage. Wild pig activity increased.
Counties received a small amount of moisture, but dry conditions continued across the district. Winter wheat was in poor condition. Irrigated wheat was in fair condition. Row-crop fields were needing rain before planting. Cattle were on supplemental feed across the district.
Temperatures were low, and dry conditions continued. Overall soil moisture was very short to short. Rangeland and pasture conditions were poor to very poor in most counties. Fieldwork was limited with many producers putting out compost, manure and dry fertilizer for the upcoming year. Winter wheat crops continued to struggle with the lack of moisture. Some producers were beginning to irrigate wheat on warmer days. Cattle were receiving supplemental feed on rangelands and pasture. Wheat pasture cattle were being sold. Conditions remained extremely dry.
Soil moisture ranged from very short to adequate. Areas received 0.75-1.25 inches of rainfall. Sleet and hail came with the rainfall. The moisture was helping pastures. More moisture was needed to bring the soil out of drought conditions. Oats were in fair to good condition. Winter wheat was in fair to good condition. Pasture and rangeland were fair to poor.
Overnight temperatures were in the 30s-40s with daytime temperatures in the 60s-70s. A mid-week cold front sent temperatures to a low of 20 degrees with daytime temps in the 40s-50s. Precipitation ranged from trace amounts to 1 inch. Dry conditions continued with many counties having issues with visibility due to high winds and blowing sand. Pasture and rangeland conditions were very poor. Winter wheat was also in very poor condition. Cotton ginning was wrapping up for the season. Most growers were trying to get some fieldwork done for the coming planting season. Producers were spraying to keep insects away from crops, but others were waiting for rain before starting. A few producers started irrigating soil but will shut wells off if rain does not come soon. Pastures continued to be bare. Cattle producers were reducing stocking rates and increasing supplemental feed rations. More cattle were being sold. Producers were hanging on to goats and sheep and feeding them. Predators were active as sheep and goats were starting to kid. Feral pigs were causing damage, especially along the Pecos River. El Paso Lower Valley was receiving some effluent water for row crop pre-irrigation, pecan orchards and alfalfa fields. Rows were being listed in some areas. Water levels at Elephant Butte reservoir were low as they were last year. Although Pima cotton prices were very high this year, very little cotton was expected to be planted due to severe drought conditions.
Scattered showers were reported but all areas needed more rainfall. The weather was cold and icy midweek. Temperatures were expected to warm and could get grasses growing. Wheat was germinating, but this will likely have a negative impact on overall grain production, as late-germinating wheat may not vernalize. Fields were being prepared for spring planting but moisture will be needed before seed goes in the ground. Livestock were being fed and hayed to maintain body condition.
Scattered rainfall was reported, and soil moisture ranged from very poor to surplus. A week of sunshine in the forecast will help dry pastures in some areas for fieldwork to resume. Producers were beginning to work rice fields for planting season. Livestock appeared to be in fair condition. Soil temperatures were slightly above the mid-40s, depending on the location. Producers were considering preparing for warm-season perennial grass establishment activities over the next month. Cool-season forages were still not initiating much growth with the current cool temperatures. Rangeland and pasture conditions were holding between very poor and fair. Pastures were in late winter condition with light frost in the mornings. Some fieldwork preparation for rice planting was done on higher ground. Pond weeds grew and then died back as temperatures dropped.
Conditions were cold and windy with no measurable rainfall reported. Rangelands were extremely dry, and pastures were grazed. Warm-season plants were emerging, but the lack of subsoil moisture was slowing growth for seedlings and warm-season perennials coming out of dormancy. Corn planting began. Winter wheat and oats were in poor condition. Recent freezes allowed fruit trees to get needed chill hours for fruit production. Cattle prices remained steady while goat and sheep prices had risen slightly. Spring lambing and kidding were underway. Livestock were in fair condition. Supplemental feeding of livestock and wildlife continued.
Northern and eastern parts of the district were very short on moisture while western and southern areas received short to adequate moisture. One area reported a soaking drizzle rain. Temperatures reached 30 degrees below normal average. Irrigated food plots of oats looked good, but non-irrigated were no longer growing. Blackbrush plants were blooming. Producers continued to prepare fields for planting. Farmers in some areas were hesitant about planting because soils were powder dry. In other areas, farmers were slowly planting according to the amount of soil moisture available in fields. Cooler temperatures were delaying some plantings in areas with adequate moisture. Sunflowers, corn and sorghum were being planted before a cold front arrived with some precipitation. Warmer weather in the forecast should help those fields emerge. Vegetables, sugarcane and citrus harvests continued. Cool nighttime temperatures were helping vegetable crops. Livestock producers were providing heavy amounts of supplemental feed, marketing calves and culling cows in drier areas. Many pastures have little to no grass. Reports of fires increased, and ungrazed pastures pose a fire danger. Stock tank levels were fair. Areas with more moisture reported mixed pasture conditions with grasses and forbs emerging from dormancy. Bermuda grass remained brown and dormant. Citrus tree farmers were hoping surviving trees will bloom and produce a higher-yielding crop this year.