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Ag Economists Turn More Positive Longer-Term On the Farm Economy

Thu, 20 Jul 2023 20:01:20 GMT

The July Ag Economists’ Monthly Monitor shows weather extremes and wild swings in the commodity markets are the two biggest factors impacting short-term outlooks, but the economists surveyed expressed a more favorable view longer-term. The latest survey also shows the biggest wildcard for agriculture over the next year could be geopolitical risks tied to China and the war in Ukraine.

This is the second survey of the Ag Economists’ Monthly Monitor , a joint effort between the University of Missouri and Farm Journal. The first-of-its-kind survey collects insights from ag economists across the U.S. Nearly 60 economists are asked each month to provide their forecasts and views. They represent a wide geography with expertise in grains, livestock and policy.

This month’s survey showed several key changes from June. Economists say they believe USDA’s current corn and soybean yield projections are still too high, and they anticipate a drop in forecasted corn and soybean prices. The economists in the July survey also predict cattle and hog prices could continue to climb higher this year.

“To me, the biggest thing that sticks out in the July survey is the more positive view 12 months into the future relative to where we were in June,” says Scott Brown, University of Missouri agricultural economist who helps author the survey each month. “In the very short run, the economists are a little less positive than where they were in June. I think that has a lot to do with the weather and general market moves we’ve seen over the last few weeks.”

(Farm Journal)

The longer-term optimism revealed in the survey is despite economists’ expectations for two consecutive years of declining net farm income, falling short of the record set in 2022. The July Monthly Monitor forecasts net farm income to fall to $132.8 billion in 2023, which is below the $134.7 billion in the June survey and USDA’s current net farm income estimate of $136.9 billion. That’s still a big drop from 2022, when USDA says net farm income reached $162.7 billion.

This month’s survey also tried to peel back the layers of what commodities might be aiding the more positive long-term outlook versus weighing on the overall health of the ag economy in the short-term.

“On the crop side, it’s positive to very positive,” Brown says. “There are a few in the negative category, but a majority of economists responded the crops side of the equation looks positive. Whereas, on the livestock side, we have more negatives than we have positives.”

Economists say there are several positive developments that could shape U.S. agriculture, such as continued productivity and efficiency gains; a healthy farm economy and balance sheets; projected shifts in interest rates; new and expanded opportunities for renewable fuels; and the strength of the U.S. cattle market and meat exports as a whole. Geopolitical issues could also impact global crop production and, in turn, bring some demand back to the U.S.

Cuts to Projected U.S. Crop Yields

The survey was sent to ag economists the day after USDA released its most recent yield forecast in the July WASDE report. In what was called a rare move early in the growing season, USDA cut its corn yield forecast by 2.2% to 177.5 bu. per acre, down from 181.5 bu. per acre in the June report. The July Ag Economists’ Monthly Monitor is nearly 3 bu. per acre lower than USDA, with the group of ag economists projecting a yield of 174.9 bu. per acre.

“For me, the interesting piece of this story is there’s a lot of variability in the responses from those being surveyed, which highlights how varied the weather has been as you move around the country,” Brown says. “We had yield estimates slightly below 170 bu. per acre on the low end and some above 180 bu. per acre on the high end.”

(Farm Journal)

Brown says the soybean estimate also came in lower than both USDA’s July WASDE report and the June Ag Economists’ Monthly Monitor survey. USDA estimates soybean yield at 52 bu. per acre, and the average ag economists’ estimate is 50.6 bu. per acre, a 0.5 bu. cut from the June survey.

“There was a little less variability from top to bottom on those yields, but when you look at prices, even with what was a lower corn yield, their estimate of 2023/2024 corn prices went from $4.99 in June to $4.80 in the July survey,” Brown says.

(Farm Journal)

What Economists are Watching the Next Six Months for Crop Prices

When asked what factors will impact crop prices in the next six months, economists said:

Final yields
Export demand and competition
Weather domestically and abroad
Geopolitical risk in the Black Sea and China, including developments that impact ag exports in Ukraine/Russia

“I think a couple of things stick out beyond the weather discussion, and one is export demand as well as global competition, such as what’s going to happen with South America in terms of competing with U.S. corn and soybean markets.

“The economists certainly continue to talk about the geopolitical risk in the Black Sea and China, in particular, and what that means for our ability to export corn and soybeans as we look ahead,” Brown says. “Those are really the two big ones that came out of this survey.”

What Livestock Economists Are Watching the Next 6 Months for Livestock

Ag economists think the following factors will impact prices the next six months:

Changes in feed costs and impact of corn prices
Rising milk prices
Consumer meat demand and influences from macroeconomic factors, both domestically and abroad
Placements of cattle on feed

Brown says while the majority of economists are concerned about feed costs and the impact on livestock producers, the second-biggest concern revealed in the survey is demand. Economists pointed to both domestic and international demand as possible problem areas.

“2021 and 2022 were extremely positive from a demand standpoint, and we seem to be backing up a little bit in 2023,” Brown says.

Economists More Bullish on Cattle and Hogs

The July Ag Economists’ Monthly Monitor shows economists are more positive when asked about cattle and hog prices, but they have a more negative view on dairy, which they consider the biggest weight in the livestock sector.

“When you look at where pork prices have gone over the last month, it’s gotten more positive. Now, I don’t want to suggest we’re back in black ink, but we have seen recovery in things like the pork cutout value,” Brown says. “The economists continue to worry about how the general economy will affect livestock going forward, but overall, it seems we’re seeing a more positive view from the livestock perspective in this month’s survey.”

(Farm Journal)

Based on the July monitor, economists expect average milk prices to fall back to 2021 levels, but production costs will continue to be higher in 2023 versus 2021.

“No. 1, the economists continue to worry about feed costs,” Brown says. “We continue to see fairly high feed costs affecting profitability. So even in the case of beef cattle, where we’re talking record cattle prices, we’re not talking record profitability because of the feed cost side.”

(Farm Journal)

Longer-Term Look at the Health of Agriculture

Over the next 12 months, there are several things that could shape the health of the ag economy, according to the July survey:

Crop prices and production costs, including inputs, rental rates, land values and supply chain disruptions
Subsequent impact on producer margins and the protein sector from rising interest rates and inflationary pressure
Weather considerations, including drought conditions in the short run and yield impacts in longer run
Geopolitical tensions and competitiveness of U.S. ag exports
Changes in consumer demand domestically and abroad, new markets for agricultural products, including biofuels

“One thing that came pretty strongly out of the survey is the continued increases in productivity in agriculture, which makes us more efficient,” Brown says. “The farm economy is generally healthy, and when you look at balance sheets, they are still really, really strong in many cases. That’s despite a lot of the issues we’ve talked about.”

In the July survey, economists voiced more concerns about interest rates and the impact on operating loans. One economist also mentioned the industry might be underestimating the negative impact Proposition 12 could have on the entire livestock industry.

The Turbulent Relationship Between the U.S. and China

While none of the ag economists surveyed think the U.S. will enter into a trade war with China in 2023, economists continue to remain cautious about China, which could have a direct impact on U.S. agriculture.

When asked to list the top factors shaping trade relations between the U.S. and China, economists said:

POTUS and political polarization in the U.S.
Non‐agricultural geopolitical tensions, including national security concerns, support of Taiwan and limits on technological production
Changes in China’s economic growth, including population and demographics
Russia’s invasion of Ukraine and Russia’s relationship with China
Quality, price and availability of U.S. products compared with global competitors

Potential Events/Factors Not Getting Enough Attention Today

The July survey also asked economists to outline any factors or events that currently aren’t receiving enough attention but could shape agriculture over the next 12 months. One economist brought up impacts of geopolitical risks and fallout from the war in Ukraine, but also a potential war between the U.S. and China.

Other potential events that could cause a major shakeup in agriculture include:

Weather events, domestically and abroad, warranting a broader conversation on climate
Potential for a significant recession in China
Focus on renewable diesel obscuring importance of RFS in overall biofuel use
Workforce concerns for producing, processing and transporting agricultural products domestically and abroad
Declining EU pork production and commerce implications of Proposition 12
Strikes at shipping ports in Vancouver and potential for upward pressure on potash prices with reduced production capacity at Nutrien mines in Saskatchewan

Previous Ag Economists’ Monthly Monitor Coverage

Most Ag Economists Think It’s Unlikely the 2023 Farm Bill Will Be Written in 2023

High Production Costs Could Weigh on the Ag Economy Through 2024, New Survey of Economists Finds

Do Fundamentals Even Matter to the Commodity Markets? A Key Lesson From 2022

Tue, 03 Jan 2023 20:29:26 GMT

As the new year brings fresh market action, volatility continues to be the main theme to enter the new year. The main market trends continue to dominate the markets to kick off 2023, and analysts say that’s why there are some keys lessons to keep in mind from 2022.

Both Chip Nellinger of Blue Reef Agri-Marketing and Arlan Suderman of StoneX Group reflected on how the markets performed in 2022, and according to Suderman, there are three main things the market taught us last year.

“First of all, we saw geopolitical realignment across the globe,” says Suderman. “And that had to do with China and with Russia, most specifically with Russia, but now China aligning with Russia. And so, who you do business with depends on who you’re friends with a net changes, freight increases – the cost of freight - it decreases the efficiencies of the market and created a lot of anxiety in countries became less comfortable with just-in-time supplies.”

Suderman says as a result, we started to see some countries hoard commodity supplies during the first half of the year, which spurred the run-up in market prices. That also created a tremendous amount of volatility. However, 2022 produced another key lesson in the markets, one in which could carry into 2023.

“And then a third thing is, it was the year of the algos, which totally changed how we use the derivatives markets. Traditional specs stepped aside from the market, especially in the wheat market and some of the others, as well as we saw overall volume spike, but open interest go to multi year lows long term lows,” says Suderman. “So, the market price, the derivatives market, was primarily driven by the algos, which really changed the behavior, the market and the way we approached the market.”

Algos, which is an abbreviated term for algorithmic trading, is also referred to as automated trading and black-box trading. This method of trading is done by a computer program that follows a defined set of instructions - or an algorithm - to place a trade. The trades happen quicker than what can be done by a human trader.

Nellinger has a different take on the overall market action. He says even with the algos having a strong hold of the market, 2022 reminded us fundamentals still matter.

“I think one thing that we learned this year is the market still work, they still are going to, you know, respond to supply and demand and demand fundamentals,” says Nellinger. “They may become inefficient at times because of the algos and the massive amount of money flowing in and out of our markets, but that provides opportunity at times to both on the upside and the downside.”

Related Story: Jerry Gulke: 2022 Was a Year for the Ages, What Awaits in 2023?

Nellinger points out the markets still can overreact to both sides of the market, but he says it’s all in response to the fundamentals.

“We’ve seen that, you know, across the board on corn, beans and wheat at different times of the year,” adds Nellinger. “We’ve seen the market respond to tightening supplies and increasing demand. That is going to be there going forward. It’s been the bellwether to our markets and what makes them function in the past. And in spite of a lot of algo money and speculative money coming in and out of our markets at times, the fundamentals still matter.”

AgDay TV Markets Now: John Payne Discusses the Weather Rally in Soybeans and What Drives Markets to Start 2023

Chip Flory: The Big Grain Market Movers for 2023

Ukrainian Farmers Destroy Harvest Equipment to Keep Russians from Taking Crops

Tue, 12 Jul 2022 20:33:32 GMT

Few things are more important to a farmer than harvesting his crops, yet farmers in the Ukraine are taking measures to prevent that very action. Many are now destroying harvest equipment to keep the Russian army from confiscating the wheat currently ripening in fields.

“Some of our clients in the Ukraine have been actually damaging their combines, so the Russians can’t combine the wheat,” says Dan Basse, president of AgResource Company.

“It’s a war zone. It’s messy. It’s a shame, and our hearts bleed for the Ukrainians who are being harmed,” Basse told AgriTalk host Chip Flory on Monday.

Little Fuel To Be Had

In recent days, the Russian army has bombed refineries, seaports and many other parts of the country’s infrastructure, crippling it and turning it into rubble. Basse estimates that at least three, maybe four, of the seven major export terminals out of the Ukraine have sustained such major damage months of work would be required to repair them.

The destruction means that even if farmers have kept their equipment intact, many are unable to access much needed diesel to fuel the harvest.

“If you were to place a diesel order today in the wheat areas, which is really central and western Ukraine, you would find that it’s probably four to six weeks to get delivery on it,” Basse says.

The delay means some of the crop will likely remain in fields too long, damaging its quality and viability, and some of the crop won’t be harvested at all.

That reality would mean supplies of wheat would take a significant hit in the global marketplace. It’s also why Basse challenges the USDA’s current prediction that Russia will export 40 million metric tons (mmt) of wheat this year and somehow compensate for the shortfall from the Ukraine.

“A lot of the people I talked to in Europe have that number closer to 30 mmt, which would leave the world short 10 mmt of wheat,” he says. “As Russia begins its harvest, we’ll start to understand that it is not going to have a big export campaign. I’m afraid it’s a pipe dream, if you will, I just don’t think logistics will allow it.”

What countries will be shorted of wheat and, potentially, other grains? Basse says he is still working to figure that out. For now, he believes the shortfall is likely to occur in countries such as Bangladesh, Pakistan and/or parts of Southeast Asia. He doesn’t believe the U.S. will be in that mix.

“There will be some shortages, and it seems to me that if I’m an end user, I probably should be taking some forward coverage,” he says. “We think (demand destruction) will be shifted forward, because people are still eating about the same amount of calories as it sits today at these current prices.”

Seasons Of Loss

As for Ukranian farmers, Basse is worried what will happen to some of them if crops can’t be harvested and sold.

“Financing is running out. I will tell you that as I talk to my friends and clients, we will have farmers that go bankrupt. And then of course, as that happens, we will really have issues with the next wheat crop and the next corn crop. So, I’m actually more concerned about 2023 production than I am about 2022.”

In the meantime, he believes Putin will continue to wage war, inflicting as much “pain and harm and psychological damage on Ukrainians as possible.”

“Ukrainians are such a proud people, as long as we keep sending them weapons, they will fight to the last man standing. That is how angry and riled up they are,” Basse adds. “So that’s why when we talk about this war going on, as long as the West keeps sending weapons, the war will go on.”

Listen to the complete discussion on AgriTalk between Basse and Flory here:

Farmers Are Now Paying Above $5 For Off-Road Diesel, And It's More Than Just Russia to Blame

Tue, 14 Jun 2022 14:04:57 GMT

Gas prices keep crushing records in the U.S., but diesel prices are posting even more sticker shock as fears of a possible diesel shortage this year are also causing concerns. It’s not just retail diesel prices that are rapidly rising. There are now reports of farmers booking off-road diesel for farm use trending above the $5 mark, too.

(Farm Journal)

It’s an issue facing the trucking industry from coast to coast. AAA reports the national average diesel price is now $5.77 a gallon. A year ago, it was $3.21.

“It’s almost like every five minutes, I see the little live indicator tick up on our GasBuddy data,” Patrick De Haan, head of petroleum analysis, GasBuddy , told U.S. Farm Report two weeks ago.

GasBuddy tracks both diesel and gas prices in real time. And while the pain at the pump is something drivers are seeing across the country, it’s also an issue plaguing agricultural producers across the U.S.

“We had some farm diesel delivered yesterday, and it cost us $4.85 or $4.89 a gallon delivered. Two years ago, we bought fuel for just over $1,” Craig Moss, a farmer in Hull, Iowa, told Farm Journal’s Michelle Rook.

The rapid rise in input prices is eating into outlooks this year, even with high livestock and grain prices.

“It’s a challenging market, no doubt, buying $8 corn and $5.50 diesel; it’s a tremendous challenge for producers,” says David Newman, a pork producer in Myrtle, Mo.

While prices at the pump for both gas and diesel climbed this week, it’s a similar story for off-road diesel prices. A survey of farmers on Twitter drew a wide range of responses regarding the prices they are currently seeing. Farmers reported off-road diesel at $4.13 in the northern Corn Belt, while off-road diesel is now above $5 for those further east and in western states like Montana.

Research by Texas A&M Agricultural and Food Policy Center (AFPC) shows farmers are seeing nearly every input cost on their farm rise this year. Nitrogen prices produced the biggest increase, up more than 133% per acre year-over-year. Phosphorus and potassium fertilizer were up nearly 93% during that time. That was followed by fuel and lube, which jumped more than 86% compared to last year.

(Farm Journal)

The latest baseline projections from the University of Missouri Food and Policy Research Institute (FAPRI) also shows the sharp rise in fuels costs today.

“A 57% increase may or may not capture what’s happening right now throughout the whole calendar year of 2022, but it is capturing at least the part that we’re seeing right now,” says Bob Maltsbarger, a senior research economist with FAPRI.

FAPRI’s baseline projection shows even if fuel prices retreat the second half of this year, higher overall production costs will continue to sway balance sheets. Maltsbarger points out diesel prices vary by not only geography, but also by farm, especially considering crops like corn typically require more fuel use.

“It will vary quite a bit on the dollars-per-acre impact, but if you have about an equal increase on a percentage change basis, you will see those dollars per acre be more expensive in this calendar year,” he says.

Why Are Diesel Prices So High?

Why have diesel prices raced higher this year? It’s largely due to a shortage of refining capacity, not a shortage of oil, but the prices started to climb higher long before Russia invaded Ukraine.

“The nation is dealing with about a million barrels a day less of capacity than we had just three years ago. That’s the equivalent of about 5%,” De Haan explains. “So, not only is oil a problem with sanctions on Russia’s oil, but turning that oil into something like gasoline and diesel is also now a choke point.”

“Refineries have less capacity; we have about 1.2 million barrels a day of less capacity because of shutdowns that occurred prior to the pandemic,” says Debnil Chowdhury, vice president, head of Americas Refining, S&P Global Commodity Insights. “Also during the pandemic, we’ve had some convergence to biofuels’ facilities as well as a refinery that was hit by a hurricane and damaged to the point where it can’t really be run anymore.”

S&P Global Commodities is also watching the situation. At a time when the U.S. is typically building inventory, the opposite is occurring, which is also heightening concerns about a possible shortage.

“This is the year we’re running very low on inventory entering the summertime, and any type of impact on refining capacity is really going to increase the chance of the shortage,” says Chowdhury.

One Hurricane Away from a Diesel Shortage?

With supplies already tight, De Haan says the U.S. can’t afford to lose any refining capacity, which is a major risk considering NOAA is projecting an above-normal hurricane season.

“We’re probably one Category 3 storm away [from a shortage], and that Category 3 storm would have to take aim for an area roughly from the Mississippi River to Houston,” says De Haan. “That’s the really sensitive area. Not only could it affect refining, but it could affect offshore oil production.”

One of the reasons inventories are already tight is due to Hurricane Ida making a direct hit along the Gulf Coast. Refineries located near New Orleans went offline last fall, with some still not back online today. That major hurricane, and the devastation it caused, was one of the initial dominoes to fall for diesel prices.

“This all actually started before the war. It began in October of last year, when natural gas prices in Europe started to rise,” Chowdhury says. “The cost of natural gas increased substantially in Europe, and why that’s important to a Midwest farmer is because the cost of producing that diesel increased with it.”

Searching for Solutions

While the financial incentive is there today to pump more oil and increase refining capacity, one worker in the oil industry told U.S. Farm Report that the push to electric has investors concerned about the risk of such an investment. And considering it takes years for refining capacity to come online, that’s also not a solution today.

There’s talk of the Biden administration tapping into diesel reserves to help ease supply concerns, but De Haan says not only will that move have a minimal impact, it’s also a question of timing.

“It’s only a million barrels, so it’s not a infinite amount of supply,” he says. “The worry is that if we release those barrels of diesel now from areas in the Northeast, we’re also in the start of hurricane season. Now we do have some tropical activity. So when do you use the inventories? Do you use them now because of high prices? Or, do you wait for a bigger potential issue later this summer?”

(Farm Journal)

In order to relieve the tight diesel supply situation, Chowdhury points out the other option is for the government to wave the Merchant Marine Act of 1920, otherwise known as the Jones Act.

“The U.S. refiner now has to decide do we send product to Europe? We can send it via pipeline easily, but because of the Jones Act, which is a regulation that mandates U.S. flagged vessels from port to port, it’s not something that we could do now. And that’s something that the government could look at waving if we do face a shortage,” says Chowdhury.

The Jones Act is a federal statute that was established more than 100 years ago. It requires all vessels carrying good between two U.S. points be American-built, owned, crewed and flagged. The policy was created to help sustain American jobs, and in turn, generate economic benefits each year. Proponents claim the Jones Act has secured critical movement of goods over the years.

How Long Could the Diesel Price Pain Last?

While the industry searches for possible solutions, those who follow and track refineries don’t see a dramatic drop in diesel prices anytime soon.

“These prices are not going to go back to the levels we had at the beginning of 2021. It’s more likely that we’ll see maybe, you know, a $5 to $10 decline in crude price, and that would equate to maybe 50¢ to 60¢ on the diesel price itself. We’re not talking about a major relief,” Chowdhury says.

On the heels of diesel prices climbing higher again this week, anyone hoping for relief might have to look out beyond this year.

“It could take a couple of years. Keep in mind the longer we go down this road, and that demand eclipses supply, the more catching up we’re going to have to do,” De Haan says.

Biden: Double Crop Because 'We Can't Take Any Chances'

Thu, 12 May 2022 02:54:31 GMT

Farm policy took center stage on Wednesday in Kankakee, Ill. President Biden visited OC Farms, owned by Jeff and Eugenia O’Connor.

During the visit, Biden—along with USDA Secretary Tom Vilsack—announced the administration’s latest efforts to alleviate rising costs on American’s pocketbooks through additional agricultural funding.

Fertilizer Makes Headlines

Purdue University-CME Group’s April Ag Economy Barometer showed producers experienced a challenge in sourcing fertilizer for 2022. The survey found 34% of producers reported trouble purchasing inputs, which is up 7% from surveys conducted in March.

To help mitigate costs, USDA says it will double-down on investments in domestic fertilizer production by increasing funding to $500 million. A portion of the funds will also be used to help farmers adopt precision agriculture methods that will reduce fertilizer use.

Inaccessible Grain Opens Door fo U.S. Exports

According to Biden, Ukraine has 20 million tons of stored grain awaiting export to various countries such as Africa, their biggest importer. He says Putin’s war, not sanctions, are impacting harvests and disrupting the movement of food by land and sea to nations in need.

“We’re going to see what actions we can take to increase fertilizer supplies globally,” says Biden. “We’re also going to see how we can work together to prevent export restrictions on food and agricultural inputs and bring more global production to market which will stabilize prices and bring more certainty to our farmers and keep people from dying of hunger.”

Double Crop to Drop Inflated Food Costs

In late April, USDA introduced a proposal to Congress , pleading for additional funding to offset costs resulting from the war in Ukraine. Part of the proposed funding included $250 million to aid U.S. producers to increase crop volumes through double cropping.

During the visit on Wednesday, Biden shared USDA will raise from $250 million to $500 million, and open the double cropping insurance floor to a total of 1,935 counties—up 681 counties from the initial announcement.

USDA says double cropping will boost production without substituting crops or cultivating new land. While the department recognizes there are risks associated with the practice, Biden says his team has a plan to overcome those risks.

“The growing season for wheat is short and if the weather conditions aren’t ideal or there are other disruptions, then the timing of everything is thrown off,” says Biden. “But it’s a risk we need to take and that’s why my administration is looking at how to extend crop insurance coverage to give financial security to farmers.”

Following the announcement, Vilsack boarded a plane to Germany for the G7 summit where, he and fellow agriculturalists will devise a plan to overcome food loses due to Russia’s invasion of Ukraine.

“Exploitation” in the Marketplace

50 years ago, ranchers received 60¢ on the dollar for harvested beef, according to Biden. He says today, they get 39¢. Similarly, he says hogs yielded 40¢-to-60¢ on the dollar for farmers 50-years ago but pens out to “about” 19¢ today, which reflects a market “distorted” by lack of competition.

“Capitalism without competition is not capitalism,” says Biden. “It’s exploitation.”

In January, the Biden administration allocated $1 billion in American Rescue Funds to expand independent meat processing capacity as part of a broader initiative to break up what it calls a meat and poultry processor monopoly. Biden says the plan will provide producers a chance “to sue companies they contract with over unfair, discriminatory or deceptive practices,” while reworking “Product of USA” label requirements.

Additionally, various Senators have introduced a bill to amend the Agricultural Marketing Act of 1946 to include a cattle contract library by way of Cattle Price Discovery and Transparency Ac t.

Gas Prices Continue to Soar

Biden recently announced the sale of year-round E15 , which he said on Wednesday has decreased pump costs by 10¢ . However, the AAA reports regular gasoline price averages were at $4.40 on Wednesday, up 29¢ from the average reported a month ago.

Biden maintains the price hike can be attributed to Russia’s invasion of Ukraine but says—along with Vilsack—the expanded E15 supply along with the USDA’s $100 million in ethanol infrastructure will ultimately bring prices down in the long run.

More on ag policy:

> 30% of Farmers Still Having Trouble Finding Essential Crop Inputs for This Year
> White House Asks Congress for Additional $33 Billion in Aid for Ukraine
> Everything You Need to Know About the Proposed $500M to Ag in Biden’s Ukraine Aid Program
> Biden Plan Directs $1 Billion To Impact Meat & Poultry Processing, Strengthen P&SA, Add New Labeling Rules
> E15 Summer Ban Suspended, USDA Commits $700M To Biofuels Producers
> DOE Announces Plan to Replenish Tapped Oil Reserves

Diesel Prices Just Hit a New Record High, Here's Why a Diesel Shortage May Be Next

Tue, 10 May 2022 21:18:45 GMT

Farmers are already faced with a shortage of equipment parts, tires and some crop inputs. Now, due to increased demand and a drop in production, a diesel shortage may be next as the largest diesel distribution hub in the U.S. is sitting on supplies at a 30-year low.

Record gap between gasoline and diesel, but the gap will start to shrink very soon- not by leaps and bounds, but slowly. https://t.co/oFGj8piR3h
— Patrick De Haan ⛽️📊 (@GasBuddyGuy) May 9, 2022

Diesel prices hit a record again this week. The national average price of diesel is now $5.54 per gallon, which is an increase of 22 cents from last week, which was when the most recent record was set. Data shows there’s no state that’s currently seeing diesel prices below $5.12 per gallon.

So, what’s causing the historic run-up in prices?

It’s a combination of things, but Russia, supply chain trying to play catch-up and lower production along the East Coast are all adding to the dire supply situation.

“Diesel supply is short all over the world due to sanctions against Russian oil and much higher post-pandemic demand as supply restocking takes place,” says Peter Meyer with S&P Global Commodity Insights.

Meyer adds the “just in time” supply chain model only exacerbates the problem as the supply chain works through issues that date back to the Covid-19 pandemic.

Some farmers are now even reporting farm diesel prices are higher than on-road diesel, which is typically not the case.

Record prices are one thing, but getting your hands on enough diesel may be the next issue for farmers.

“Certain areas of the country have seen shortages already and we expect that to continue. Supplies at New York Harbor–a hub for diesel distribution–are at a 30-year low,” says Meyer. “As such, the East Coast of the U.S. has been hit especially hard, resulting in diesel prices above $6.00 per gallon in that area, well over the equivalent of $250 per barrel. Exports of U.S. gasoline, diesel, and jet fuel to Latin America is also very high, adding to the tightness.”

(Farm Journal)

The bottlenecks in the diesel supplies are not a shortage of oil that the U.S. is dealing with, even with the sanctions against Russia. Instead, Meyer says it’s a shortage of refining capacity on the East Coast.

The problem on the East Coast is refining capacity, not so much the supply of oil,” he says. “East Coast capacity has been cut in half from 1.6 million barrels per day to 800,000 barrels per day over the past 10 years as half of the refineries in the east have shuttered. Lower production capacities and higher post pandemic demand has caused this squeeze in the eastern U.S.”

Meyer says making price forecasts is proving to be extremely difficult considering, but margins are enticing refiners to produce as much diesel as possible.

“When the profit margin on producing diesel is over $70 per barrel, every refining company in the US will be doing all they can to produce as much as they can,” says Meyer. One bright spot may be that after a cold spring, heating oil demand will obviously diminish quickly in the summer months.”

Meyer also says renewable diesel production may actually benefit from the historic spike in diesel prices, but he points out soy oil, which is still the predominate feedstock, continues to take its lead from the oil product markets and is overpriced for many.

Diesel Export Ban Looming?

There’s a higher demand around the globe for products like diesel, heating oil and jet fuel, which are known as “middle distillates” since they are made from the middle of the boiling range when oil is turned into products. The U.S. currently exports more than 1-million barrels of distillates every day to countries such as Mexico, Brazil and Chile.

So could an export ban be coming for diesel fuel?

AgriTalk host Chip Flory put that question to Farm Journal Washington analyst Jim Wiesemeyer during this week’s “Signal to Noise.” Wiesemeyer says while it’s not known to be on the table at this point, anything his possible. You can listen to that discussion here.

Labor Issues, Idle Trains Leave U.S. Grain and Food Stranded

Wed, 04 May 2022 13:55:57 GMT

Rail backlogs in the United States are delaying shipment of grains as well as processed flour and corn syrup, contributing to the national problem of inflation, food and grain companies said at a hearing this week.

Russia’s invasion of Ukraine has increased prices of wheat, corn and vegetable oils after the COVID-19 pandemic disrupted supply chains, and rail delays could further add to costs that are weighing on consumers.

“This is the price of bread going up. This is ethanol not getting mixed with gasoline, and the price at the pump going up,” said Martin J. Oberman, chairman of the Surface Transportation Board (STB), which oversees Class I rail carriers and held the hearing.

Included in the hearing were Berkshire Hathaway Inc’s BNSF Railway, Union Pacific Corp, Norfolk
Southern Corp, CSX Corp, Canadian National Railway Company and Canadian Pacific Railway Ltd.

Jon Setterdahl, the product and services Leader at Landus Cooperative, said in a letter to the STB that rail transit times from the farmer-owned cooperative have more than doubled.

Landus buys grain from 7,000 farmers across Iowa and described turning away farmer loads of corn and soybeans as country grain storage elevators waited 20 days for rail carriers to pick up loaded grain cars, up from a week and a half.

“This delay in March consisted in a total five trains being delayed into April, which is a total shortage of grain shipments in that month alone of 2.250 million bushels,” said Setterdahl.

U.S. food prices rose 8.8% in March from a year earlier, according to the Bureau of Labor Statistics.

Rail carriers said the delays are due to recent extreme weather and a surge in shipping demand at the end of 2021.

But shippers blame cost-saving measures at the railways before the pandemic, including labor force cuts, storing locomotives to save fuel and stretching train length to as long as 3 miles (4.8 km), which they say have increased congestion, downtime and delays.

BNSF, the largest agricultural rail shipper in the nation, reduced its train, yard and engine workforce by 20% in the year prior to the pandemic, furloughing another fifth of its workers in May 2020, according to the STB.

“When the railroads talk about this being a COVID issue, or related to labor shortages across the economy, that’s their latest excuse,” said Eamon Monahan, vice president of environmental affairs for the Corn Refiners Association. “This is absolutely a years-long issue.”

Cindy Sanborn, chief operating officer of Norfolk Southern Corp which owns Norfolk Southern Railway, said cost-saving innovations implemented in the last decade are needed in order to innovate and remain competitive with trucking and other modes of transportation.

But shippers reject the argument that rail competes with trucking.

“Our members don’t produce truckloads or carloads,” said Monahan. “It is trainloads. Our industry can only operate by rail.”

(Reporting by Christopher Walljasper in Chicago Editing by Caroline Stauffer and Matthew Lewis)

The Ukraine-Russian War: Rampant Inflation Puts Serious Squeeze on Disposable Income

Fri, 01 Apr 2022 13:59:10 GMT

Although the U.S. may not be feeling the immediate impact of the Ukraine-Russia War yet, it’s coming, says Rupert Claxton, livestock and meat director at Gira.

Much higher energy costs and higher feed costs as a result of the war between Ukraine and Russia are putting even more pressure on rising commodity prices. Ukraine grain and oilseed exports under any scenario are going to be minimized in 2022, but fertilizer could be the limiting factor, Claxton said during a Pork Checkoff webinar.

“There’s a huge impact on fertilizer cost because gas is really important in the production of fertilizer,” Claxton says. “Going forward, we’ve got to think about this sort of compounding effect of various costs going up. We’re seeing this across the whole system – fertilizer, feed, energy, transportation – nearly everything is bearing this oil price at the moment.”

He says farmers are going to be more sensitive about when and how they put fertilizer on. At $900 to $1,000 a ton rather than $200 to $250 a ton, will they just put it on speculatively? Probably not, Claxton says. They are more likely to “keep it in the barn” for another day.

This isn’t just happening in the U.S., he adds, it’s happening all over the globe. The result will be poorer yields and less grain on the global market.

“Now, farmers, if they’re clever, will be able to maximize what they do with their fertilizer. But that still means at the end of the day, there’ll be less grain in the world market and therefore higher prices,” Claxton says. “And you can take 55 million tons of grain out of the world market that’s missing from the Ukraine in the next 12 months at least – their export volume on the world market.”

So, what does this mean for U.S. pork producers?

Feed Prices

“U.S. pork producers buy a lot of feed forward. They’re much better at hedging, both in and out and further ahead, than Europeans,” Claxton says. “The U.S. is not seeing that feeding crop increase today, but we can see it out there.”

No one is denying that these increases in feed cost will be passed on to the meat and livestock producers, he adds.

“We’ve got a whole load of other cost increases that we are paying for, whether that’s fuel on the farm, transportation, labor,” Claxton says. “The fact that hog prices are where they are today means you can actually bear some of that price increase, and still make a profit on it.”

Recover More Value

The U.S. market has been staggering in recent years, he says, as it continues to see year-on-year growth in meat consumption. There’s no question chicken is a big part of that, but he says it’s happening across all species and continues at pretty good values.

“We’ve been pretty good in the U.S. at passing some of that cost on and recovering more value out of the carcass. So that’s been a really good story,” he says.

However, looking ahead into the next 18 months, he says producers may need to swing their thinking back to 2011-12, when they last saw those big price increases.

“Back then, the European industry wasn’t very good at recovering byproducts out of the carcasses. They were making enough money on the carcass, although it was a bit tight. Suddenly they got a lot better understanding the value of various parts of the carcass and trying to recover money from what they were doing because cost of production had gone up markedly and they struggled to pass that through to the consumer.”

Claxton questions how much more the U.S. pork industry can really recover out of the carcass to add value without passing all of the cost increase on to the consumer.

Consumption Decline

The reality is that the consumer is already feeling the squeeze, Claxton says. High gas prices, increased energy costs and inflation in goods across the spectrum are causing consumers to think twice.

“It all eventually comes back to their disposable income, how much they have left over that they can use to go out and spend on nice things,” he says. “At the end of the day, meat is a luxury product. It’s not a given that people will go and buy, especially the higher end bits of meat.”

Middle-income families may not be saying no to meat purchases yet, but he says low-income workers are definitely having to take a step back to consider whether or not they can afford to buy as much meat as they typically would. Claxton says this group of consumers is critical when it comes to absorbing a certain amount of meat out of the market.

“There’s a whole basket of issues that are a problem. That’s the thing that the pork producer needs to keep an eye on – the pinch,” Claxton says. “It’s hard to pass those costs on in a market where the consumer at the other end is feeling squeezed.”

An Eye on Exports

Because of these challenges, it’s more critical than ever to get product moved through exports.

“We know some of your markets in Mexico aren’t going to perform as well, because they’re seeing consumers squeezed. And you go out into global export market, demand is generally there, but China is still not back in the market buying in significant volume,” he says.

The impact of Omicron in China is disturbing everything from ports and internal infrastructure to transportation and supply to big cities.

“Consumers aren’t going out and buying meat in the way that they would be going out in a normal situation. Some of them aren’t going to work, they haven’t got income coming in, others just can’t get to the market. In other places, you can’t get the meat to the consumer for it to be consumed,” he says.

Meanwhile, Europe has more pork than it can consume.

“Up until a month ago, Europe was very aggressive on price and had a weak Euro. So, it was exporting very competitively against the U.S. into a number of markets. The Canadian price, if you stack it up against the U.S. price, is very low at the moment as well,” he says. “There are things out there that say, the U.S. pork industry is slightly out of tune with the rest of the world. The tightness of supply is a good thing because right now the last thing you want is an oversupply, where those prices come down.”

That tightness of supply has everyone scratching their heads about what came out in USDA’s Hogs and Pigs report yesterday, he adds.

“That is the thing that’s making the industry profitable today. Don’t go and ramp up production to the point where those pigs don’t have value and you’re struggling to pay to feed them,” Claxton says.

Don’t Lose Sight of Sustainability Goals

Time and resources will be distracted from the key global challenge of climate change, Claxton says.

“You’ve got to continue to do the work you’re doing on the long-term projects – sustainability criteria, marketing of the quality of your meats,” he says. “Everyone else is still working on them. If you stop now, you fall behind that curve. So for me, the thing to really emphasize is not to take your eye off that long-term goal.”

More from Farm Journal’s PORK:

Another Bullish Hogs and Pigs Report: How Long Will This Trend Last?

5 Takeaways from an Export Expert

Pork Exports: How Much Does Taste Matter?

John Phipps: Is the U.S. Already Energy Independent?

Thu, 31 Mar 2022 14:55:25 GMT

With the ongoing war in Ukraine, a recent U.S. Farm Report viewer asked about the U.S. and energy independence.

From Gary Morrison quoting The Watchman:

“The Department of Energy was instituted on 8/04/1977, TO LESSEN OUR DEPENDENCE ON FOREIGN OIL. AND NOW IT’S 2022 -- 45 YEARS LATER -- AND THE BUDGET FOR THIS “NECESSARY” DEPARTMENT IS AT $242 BILLION A YEAR. IT HAS 16,000 FEDERAL EMPLOYEES AND APPROXIMATELY 100,000 CONTRACT EMPLOYEES; AND LOOK AT THE JOB IT HAS DONE!

(34 years ago 30% of our oil consumption was foreign imports. Today 30% of our oil consumption is foreign imports.”

I checked on these assertions. The DOE is responsible for the U.S. nuclear weapons program , nuclear reactor production for the United States Navy , energy-related research, and domestic energy production and energy conservation . It was created during an oil crisis, which helped politically, but was soon dominated by nuclear responsibilities, especially after Three-Mile Island. You can tell by how their budget of $45B is allocated. The blue bars are government employees, the green are contractors, mostly 17 major research labs like Argonne, and Los Alamos. The term “contract employee” is misleading. Contractors are not employees. Ask and Uber driver. Much of the DOE budget is for programs like nuclear weapons research, fusion, and alternative energy.

(Farm Journal)

As for our dependence on foreign oil, I know you’ve seen this before, but I consider net petroleum exports to be the true measure of oil trade, and we’ve hovered about zero recently due largely to fracking and conservation measures. We export a significant amount of finished products like gasoline, while importing geographically advantageous crude from nearby countries.

(Farm Journal)

At any rate, in 1977, 83% of our oil imports were from OPEC countries, in 2021 it was about 8%. Seventy percent of our imports come from Canada and Mexico. The DOE is not about oil nearly so much as other energy sources and cleaning up nuclear reactors. Between research and market forces, the record of DOE, with a budget about .5% of the total federal budget and 1/5 that of the Ag Department, is not that bad. Oil independence is a questionable goal for a global commodity, but it did happen under DOE’s watch.

(Farm Journal)

European Hog Farmers Fear Future as Ukraine Conflict Prompts Feed Shortage

Tue, 22 Mar 2022 18:44:11 GMT

Carlo Vittorio Ferrari runs a 2,000-head pig farm with his brother close to the city of Cremona in northern Italy. He fears for the future of his fourth-generation enterprise because of the conflict in Ukraine prompting a shortage of feed.

Italy is a major international provider of animal feed, Reuters reports, and shares of that are falling quick throughout import-reliant southern Europe.

Hungary, Serbia and Moldova are banning exports in an effort to protect their own farmers. Reuters reports prices for farms such as Ferrari’s have spiked, threatening their future. Many farmers are facing the need to cull animals if factors don’t change soon.

Italy has referred to EU guidelines limiting state assist to the sector to be waived, the article said. Meanwhile, Spain has taken steps to permit emergency purchases of corn from Argentina and Brazil. European farmers say it’s not just about corn – it’s also about soya and by-products that are hard to find.

Ukraine is one of the world’s prime corn exporters. Reuters said the closure of its ports due to the conflict has resulted in a serious impact on shipments.

“The downside is we now have an ideal storm. When the Ukrainian exports stopped, international locations like Moldova, Serbia and Hungary tried to cease exporting as a protectionist step and we discovered ourselves with an enormous downside in our ports,” Michele Liverini, vice-president of livestock feed producer Mangimi Liverini S.p.A., told Reuters.

Spain has the biggest livestock herd within the European Union with about 58.8 million head, according to EU information for 2021 of pigs, cows, sheep and goats. Italy has the fourth largest with about 22.5 million head.

Corn futures on Paris-based Euronext rose to 420 euros a metric ton earlier this month, up about 50% since Russia’s invasion of Ukraine, Reuters reports. Feed shares are being depleted in Spain, a top buyer of Ukraine.

Producers argue that for them to survive, customers need to pay more for meat, milk and eggs. Emilio Rial, director of the Coren group, a large farmers’ cooperative in Spain, said the price of primary meals manufacturing had jumped 40%, Reuters said.

“We will strive to not cross all of it on to the buyer by negotiating with the large supermarkets, however costs will inevitably rise,” Rial said in the article.

More from Farm Journal’s PORK:

ASF: Biosecurity Is Our Responsibility

How Tosh Farms Is Equipping an Unlikely Source of Employees In the Sow Barn

Lucky Penny Sells for $17,500 in OYE Night of Stars Gilt Sale

BREAKING: U.S. To Ban Russian Oil Imports

Tue, 08 Mar 2022 21:47:15 GMT

UPDATE: WASHINGTON (AP) - Biden: US ban on Russian oil a ‘powerful blow’ to ‘Putin’s war,’ warns Americans ‘defending freedom is going to cost.’

UPDATE: NEW YORK (AP) - Average price for a gallon of gasoline in the US hits a record $4.17 as the country prepares to ban Russian oil imports.

UPDATE: President Bident to speak at 10:30am EST approx. The White House says he will “announce actions to continue to hold Russia accountable”. You can watch it here .

WASHINGTON (AP) - President Joe Biden has decided to ban Russian oil imports, toughening the toll on Russia’s economy in retaliation for its invasion of Ukraine, according to a person familiar with the matter. The move follows pleas by Ukrainian President Volodmyr Zelenskyy to U.S. and Western officials to cut off the imports. Energy exports have kept a steady influx of cash flowing to Russia despite otherwise severe restrictions on its financial sector. Biden was set to announce the move as soon as Tuesday, the person said, speaking on the condition of anonymity to discuss the matter before an announcement.

NBC News reports the ban could happen as soon as Tuesday. It’s believed the move will push energy prices even higher. The President is scheduled to deliver remarks this morning from the White House about the situation involving Russia. Oil was already starting the day up over $125 a barrel on Tuesday. Follow the markets here .

(Farm Journal)

This is a developing story. Stay with us for updates.

Markets Make Historic Open Sunday as Wheat Tops $13, Soybeans Soar Past $17, Corn Closes in on $8

Mon, 07 Mar 2022 04:06:12 GMT

Commodity markets made historic moves Sunday night as c rude oil topped $130 a barrel , hitting the highest price in 13 years, and wheat topped a 14-year high trading above $13. March soybeans soared past the $17 mark, with March corn just 20 cents from $8. And as the Ukraine-Russia crisis continues, the bull run may not be over yet, as food and fuel inflation fears are also heating up.

“11 days ago when this conflict and war started in Ukraine, crude oil was in a range of $90 to $95,” says Tommy Grisafi of Advance Trading . “We were trading there for over two weeks. This conflict started, and we’ve done nothing but move up. There’s a lot of chatter out in the markets about inflation, you’d have to wonder do we start to bring up the word hyperinflation.”

The volatility in the commodity markets was on full display last week, with wheat making new highs. And the theme continued Sunday night as Chicago wheat futures rose more than 7% with prices climbing to a 14-year high over concerns about global supplies amid an escalating Russia-Ukraine war.

“Wheat had its largest move in history last week,” says Grisafi. “And as we trade tonight, wheat has new extended limits. May wheat is trading up 85 cents close to $13.”

Kansas City wheat and Minneapolis wheat both traded higher Sunday night, with both corn and soybeans also climbing more than 20 cents.

“May beans almost have a $17 in front of them,” he adds. “November soybeans are trading at a phenomenal price, historically. But we’ll see how that ends up.”

Wheat could have even higher limits this week. While commodity prices continue the bull-run, Grisafi points out other commodities are in uncharted territory with gold hitting $2,000 per ounce overnight. And as crude and gold surged, Dow Jones futures fell.

“What’s this mean to you? Well, if you’re a farmer, you’re probably rooting for high prices unless you sold it a long time ago. If you’re growing crops, you’re probably loving high prices except for one thing. How are you going to get fertilizer moving forward,” asks Grisafi.

Food and Fuel Inflation Fears

On CNN Sunday, Secretary of State Antony Blinken said the U.S. is considering a ban on Russian oil imports in coordination with European and NATO allies. The news comes as bipartisan members of Congress are asking for a full embargo.

“We’re still importing crude oil from Russia, and if we stop importing crude oil from Russia, What’s that mean? It means that gas price that I just filled up my car for today at $4 a gallon, now with today’s $13 rise in crude oil, that would put gasoline at about $4.50. So as crude goes up, of course it’s a tax to the consumer. All these things add up to you: food inflation, fuel inflation, fiber inflation, big dynamic moves, and of course while all this is happening, the Fed is talking about raising rates.”

BREAKING: Report: China Asked for Russia to Delay Attack on Ukraine Until After Winter Olympics

Wed, 02 Mar 2022 21:42:49 GMT

UPDATE: 03/02 4:40-pm-EST-(Reuters) - Senior Chinese officials told senior Russian officials in early February not to invade Ukraine before the end of the Winter Olympics in Beijing, the New York Times reported on Wednesday, citing Biden administration officials and a European official. The Times said a Western intelligence report indicates senior Chinese officials had some level of knowledge about Russia’s plans or intentions to invade Ukraine before it started last week.

UPDATE: 03/02 4:23 pm-EST-There are reports a missile struck a vessel flying under the flag of Bangladesh. Reports are that the bulk carrier has been waiting to load since February and couldn’t leave due to restrictions in the area. Videos posted to Twitter appear to show a ship on fire near Olvia Port, Ukraine. Several news reports say a Bangladeshi sailor died.

KHERSON, Ukraine - (AP) A Russian official says troops have taken the Ukrainian port city of Kherson - a claim that the Ukrainian military denies. The city is under Russian soldiers’ “complete control,” Defense Ministry spokesman Igor Konashenkov said Wednesday. He said that the city’s civilian infrastructure, essential facilities and transport are operating as usual and that there are no shortages of food or essential goods.

UPDATE: 03/02 3:43 pm -EST-GOTLAND, Sweden (AP)- Sweden says four Russian fighter jets violated its airspace over the Baltic Sea on Wednesday. The four aircraft - two SU-27 and two SU-24 fighters - flew briefly over Swedish airspace east of the island of Gotland, according to a statement from the Swedish Armed Forces. “In light of the current situation we are very concerned about the incident,” Swedish Air Force chief Carl-Johan Edstrom said. “This is unprofessional and irresponsible behavior from the Russian side.” Swedish fighter jets were scrambled and took photos of the Russian jets, the statement said.

KYIV, Ukraine - Ukrainian officials have reported a powerful explosion in Kyiv, between the Southern Railway station and the Ibis hotel, an area near Ukraine’s Defense Ministry.

WASHINGTON - A senior U.S. defense official says the Russian convoy still appears to be stalled outside the city center of Kyiv, and has made no real progress in the last couple days. The official on Wednesday said the convoy is still plagued with fuel and food shortages and logistical problems, as well as facing continued fierce resistance from Ukrainians.

WASHINGTON - The White House has announced additional sanctions against Russia and its ally Belarus, including extending export controls that target Russian oil refining and entities supporting the Russian and Belarusian military. Among Wednesday’s new measures are sanctions targeting 22 Russia defense entities that make combat aircraft, infantry fighting vehicles, electronic warfare systems, missiles, and unmanned aerial vehicles for Russia’s military.

UPDATE: 03/02 12:06pm-EST-KYIV, Ukraine (AP) - The U.N. General Assembly has voted to demand that Russia stop its offensive in Ukraine and withdraw all troops, with nations from world powers to tiny island states condemning Moscow. The vote Wednesday was 141 to 5, with 35 abstentions. It came after the 193-member assembly convened its first emergency session since 1997.

UPDATE: 03/02 12:05 pm-EST-MOSCOW (AP) - Russia’s Defense Ministry says 498 of its troops killed in Ukraine, 1,597 wounded in 1st report of military casualties.

UPDATE: 03/02 10:45 am-EST-Wheat prices reach $11. Follow the markets here .

(Farm Journal)

UPDATE: 03/02 10:03 am-EST-WASHINGTON (Reuters) - The United States is “very open” to imposing sanctions on Russia’s oil and gas industry as it also weighs the potential market impact, the White House said on Wednesday as global oil prices touched eight-year highs and supply disruptions mounted.

UPDATE: 03/02 9:49 am-EST-NEW YORK (AP) - Oil prices are surging again as Russia continues its assault on Ukraine, pushing crude up to $110 a barrel.

UPDATE: 03/02 9:31 am-EST-DUBAI/LONDON, March 2 (Reuters) - OPEC+ oil producers agreed on Wednesday to stick to their plans for a modest output rise in April, ignoring the Ukraine crisis during their talks and snubbing calls from consumers for more crude even as crude prices rocketed higher.

UPDATE: 03/02 9:25 am-EST-KYIV, Ukraine (AP) - Ukraine’s State Emergency Service says over 2,000 civilians dead in week of war; independent confirmation not possible.

UPDATE: 03/02 8:55 am EST-KYIV, Ukraine (AP) - Russia renewed its assault on Ukraine’s second-largest city in a pounding that lit up the skyline with balls of fire over populated areas. That came Wednesday even as both sides said they were ready to resume talks aimed at stopping the new devastating war in Europe. The escalation of attacks on crowded cities followed an initial round of talks between outgunned Ukraine and nuclear power Russia on Monday that resulted in only a promise to meet again. It was not clear when new talks might take place - or what they would yield. Ukraine’s president earlier said Russia must stop bombing before another meeting. Ukrainian President Volodymyr Zelenskyy has decried Russia’s bombardment as a blatant terror campaign.

President Biden is talking about the situation in Ukraine in his State of the Union speech. It starts tonight at 9 pm EST. Watch it here .

UPDATE: 03/01 4:48 pm-EST-(Reuters) - Apple Inc (AAPL.O) said on Tuesday it has paused all product sales in Russia in response to the Russian invasion of Ukraine.

UPDATE: 03/01 4:41 pm-EST-(AP) WASHINGTON - The U.S. on Tuesday injected a strong note of caution into the persistent reports that Russian military progress - including by the massive convoy outside Kyiv - has slowed, plagued by food and fuel shortages and logistical problems.

One senior Defense official said that the U.S. has seen Russian military columns literally run out of gas, and in some places running out of food, and that morale is suffering as a result.

But the official added that it is important to be pragmatic. The Russians still have a significant amount of combat power that has not yet been tapped, and “they will regroup, they will adjust, they will change their tactics.”

UPDATE: 03/01 3:38 pm-EST-WINNIPEG, Manitoba, March 1 (Reuters) - Canada’s Nutrien Ltd (NTR.TO) , the world’s biggest fertilizer producer, said on Tuesday that Russia’s invasion of Ukraine could result in prolonged disruptions to the global supply of potash and nitrogen crop nutrients.

Interim Chief Executive Ken Seitz said Nutrien will boost potash production if it sees sustained supply problems in Russia and Belarus, the world’s second-and third-largest potash-producing countries after Canada.

UPDATE: 03/01 2:00 pm-EST-(Reuters) The world’s three biggest container lines are temporarily suspending cargo shipments to and from Russia. They are Swiss-headquartered MSC, Denmark’s Maersk, and France’s CMA CGM. Maersk also added that the suspension covering all Russian ports, would not include foodstuffs, medical and humanitarian supplies.

UPDATE: 03/01 11:10 am-EST-FRANKFURT, Germany (AP) - International Energy Agency says 31 member countries agree to release 60 million barrels of oil from reserves.

UPDATE: 03/01 10:57 am-EST-KYIV, Ukraine (AP) - Ukrainian parliament says Russian forces have hit the TV tower in Ukraine’s capital of Kyiv.

UPDATE: 03/01 10:46 am-EST-Crude oil futures continue to trade above $100.

(Farm Journal)

UPDATE: 03/01 10:37 am-EST- Corn, soybeans and wheat all up double digits. Follow the markets here .

(Farm Journal)

UPDATE 03/01 9:35 am-EST-From Farm Journal Washington Analyst Jim Wiesemeyer: U.S. oil jumped to a 7-year high above $101 a barrel as the Russian assault prompts supply oil shortage fears. The U.S. and other countries are discussing releasing around 70 million barrels of strategic oil reserves, but the major unknown is whether OPEC will boost production, with an important meeting on the topic tomorrow. Pressure continues on Biden and U.S. allies to include oil trade in sanctions on Russia.

UPDATE: 03/01 9:20 am-EST-KYIV, Ukraine (AP) - Russian strikes pounded the central square in Ukraine’s second-largest city and other civilian targets, and a 40-mile convoy of tanks and other vehicles threatened the capital. Ukraine’s embattled president accused Moscow on Tuesday of resorting to terror tactics to press Europe’s largest ground war in generations. With the Kremlin increasingly isolated by tough economic sanctions that have tanked the ruble currency, Russian troops advanced on Ukraine’s two biggest cities. In strategic Kharkiv, explosions tore through the region’s Soviet-era administrative building and residential areas on Day 6 of an invasion that has shaken the 21st century world order.

U’PDATE: 02/28 5:05 pm-EST-WASHINGTON, Feb 28 (Reuters) - Americans should not be worried about nuclear war, U.S. President Joe Biden said on Monday, the day after Russian President Vladimir Putin put Russia’s nuclear deterrent on high alert amid Moscow’s ongoing invasion of Ukraine. The President was asked about by a reporter it while attending a White House celebration of Black History Month.

UPDATE: 02/28 4:54 pm-EST-KYIV, Ukraine (AP) - Russian forces are shelling Ukraine’s second-largest city, rocking a residential neighborhood, and closing in on the capital, Kyiv, in a 17-mile convoy of hundreds of tanks and other vehicles.

UPDATE: 02/28 3:57 pm-EST-TORONTO - Canada will be supplying Ukraine with anti-tank weapons systems, upgraded ammunition and is banning all imports of crude oil from Russia.

UPDATE: 02/28 3:32 pm-EST-BRUSSELS (AP) - The European Union has slapped sanctions on 26 more Russians, including oligarchs, senior officials and an energy insurance company, in response to the country’s invasion of Ukraine, bringing the total of people targeted to 680.

THE HAGUE, Netherlands (AP) - International Criminal Court prosecutor to open probe into possible war crimes or crimes against humanity in Ukraine.

BEREGSURANY, Hungary (AP) - The mass exodus of refugees from Ukraine to the eastern edge of the European Union has showed no signs of stopping as they flee Russia’s burgeoning war. The U.N. estimated Monday that more than 500,000 people have already escaped.

UPDATE: 02/28 3:10 pm-EST-KYIV, Ukraine - Satellite images show Russian troops are attacking Ukraine on multiple fronts and are advancing on the capital city of Kyiv. On Monday, a convoy consisting of hundreds of armored vehicles, tanks, artillery and support vehicles was just 17 miles (25 kilometers) from the center of Kyiv. The city is home to nearly 3 million residents. The images from Maxar Technologies also captured signs of fighting outside Kyiv, including destroyed vehicles and a damaged bridge.

UPDATE: 02/28 1:13 pm-EST-LONDON (AP) - Shell says it pulling out of Russia as President Vladimir Putin’s invasion of Ukraine costs the country’s all-important energy industry foreign investment and expertise. Shell announced its intention Monday to exit its joint ventures with Gazprom and related entities, including its 27.5% stake in the Sakhalin-II liquefied natural gas facility, its 50% stake in the Salym Petroleum Development and the Gydan energy venture. Shell also intends to end its involvement in the Nord Stream 2 pipeline project.

UPDATE: 02/28 11:59 am-EST-KYIV, Ukraine (AP) — A top adviser to Ukraine’s president says the first round of talks with Russia about ending the fighting in Ukraine has concluded, and more talks could happen soon.

UPDATE: 02/28 11:45 am-EST-KYIV, UKRAINE (AP) - Ukraine’s leader Zelenskyy applies for Ukraine to join the 27-nation European Union on the 5th day of Russian invasion.

Picture posted to Twitter:

(Farm Journal)

UPDATE: 02/28 10:53 am-EST-NEW YORK (AP) - Markets quivered Monday amid worries about how high oil prices will go and how badly the global economy will get hit after the U.S. and allies upped the financial pressure on Russia for its invasion of Ukraine. Stocks fell, investors herded into gold in search of safety and the Russian ruble tumbled to a record low below a penny at one point.

UPDATE: 02/28 10:18 am-EST-(Reuters) - Energy giant BP, global bank HSBC and the world’s biggest aircraft leasing firm AerCap joined a growing list of companies looking to exit Russia on Monday, as Western sanctions tightened the screws on Moscow over its invasion of Ukraine. Russia’s economy was already reeling on Monday. The rouble plunged as much as 30% to an all-time low, while the central bank doubled its key interest rate to 20%, kept stock markets and derivative markets closed and temporarily banned brokers from selling securities held by foreigners

UPDATE: 02/28 9:54am-EST-LVIV, Feb 28 (Reuters) - Ukrainian President Volodymyr Zelenskiy on Monday asked the European Union to allow Ukraine to gain membership under a special procedure immediately as it defends itself from invasion by Russian forces.

“Our goal is to be with all Europeans and, most importantly, to be equal. I’m sure that’s fair. I am sure we deserve it,” he said in a video speech shared on social media.

UPDATE: 02/28 9:02 am-EST-KYIV, Ukraine (AP) - Russian and Ukrainian delegations met for talks amid high hopes but low expectations for any diplomatic breakthrough. The talks Monday come after Moscow unleashed the biggest land war in Europe since World War II but met unexpectedly stiff resistance. As outgunned but determined Ukrainian forces slowed the Russian advance and sanctions crippled the Russian economy, the military confirmed that its nuclear forces were on high alert. While that raised the unimaginable specter of nuclear conflict, it was unclear what practical effect it had. A tense calm reigned Monday in Kyiv, explosions and gunfire were heard in embattled cities in eastern Ukraine, and terrified Ukrainian families huddled overnight in shelters, basements or corridors.

(Farm Journal)

UPDATE: 2/27 3:56 pm-EST-Brussels (AP)-The European Union agreed Sunday to close its airspace to Russian airlines, spend hundreds of millions of euros on buying weapons for Ukraine and ban some pro-Kremlin media outlets in its latest response to Russia’s invasion.

In what he described as “a defining moment for European history,” EU foreign policy chief Josep Borrell said that the bloc’s 27 foreign ministers had greenlighted the unprecedented support for Ukraine and that those actions would take effect within hours.

Kyiv, Ukraine (AP)-President Vladimir Putin ordered Russian nuclear forces to be put on high alert Sunday, while Ukraine’s embattled leader agreed to talks with Moscow. Right now, Putin’s troops and tanks are driving deeper into the country. Ukrainian President Volodymyr Zelenskyy’s office announced that the two sides would meet Monday at an unspecified location on the Belarusian border, where a Russian delegation was waiting Sunday.

(CNN)-Ukraine has filed an application to institute proceedings against Russia before the International Court of Justice (ICJ) for a “dispute … relating to the interpretation, application and fulfillment of the 1948 Convention and Prevention of Punishment of the Crimes of Genocide,” according to an ICJ news release on the filing.

The following was tweeted by Ukraine’s president:

(Farm Journal)

UPDATE: 5:15 pm-EST-(Reuters) - Ukraine and Russia are discussing a place and time for talks, President Volodymyr Zelenskiy’s spokesman said on social media on Friday.

“Ukraine was and remains ready to talk about a ceasefire and peace,” spokesman Sergii Nykyforov added.

UPDATE: 5:12 pm-EST-RICHMOND, Va.-Criminal ransomware operators are posting messages on the dark web pledging to launch retaliatory cyberattacks if Russia is attacked.

The ransomware group Conti, which experts say has ties to Russia, said in a note on its dark web site Friday that it would “use all our possible resources to strike back at the critical infrastructures of an enemy.”

Ransomware gangs are mostly Russian-speaking and operate with near impunity out of Russia and allied countries.

In a follow up note, the Conti group stressed it was not an ally of any government and said: “we condemn the ongoing war.”

Major ransomware attacks in the last year, including against the biggest U.S. fuel pipeline, have underscored how gangs of extortionist hackers can disrupt the economy and put lives and livelihoods at risk. The U.S. government has been warning critical infrastructure entities to prepare for possible attacks and to make sure their defenses are up to date.

Non-state hackers have promised to be active in both sides of the Russia-Ukraine conflict. The online collective Anonymous recently pledged to conduct cyberattacks to support Ukraine.

UPDATE: 4:06 pm-EST-WASHINGTON (Reuters) - The Russian assault on Ukraine was more brutal on Friday with attacks on civilian infrastructure and Kyiv, but Moscow’s forces did not advance as planned and the capital remained firmly in Ukrainian control, Ukrainian Ambassador to the United States Oksana Markarova said. Ukrainian President Volodymyr Zelenskiy remains in Kyiv and he held a “very productive” phone call with President Joe Biden on Friday, the ambassador told reporters.

Russia has deliberately targeted some of Ukraine’s civilian infrastructure and hospitals, she said, and Ukrainian officials are gathering war crimes evidence to present to the International Criminal Court.

UPDATE: 3:47 pm-EST-WASHINGTON (AP) - Biden plans move to freeze assets of Putin, Russian foreign minister, matching EU sanctions against Russian leadership.

UPDATE: 1:14 pm-EST-Tweet from Ukrainian President Volodymyr Zelenskyy:

(Farm Journal)

UPDATE: 1:06 pm-EST-BRUSSELS (AP) - NATO chief says leaders agree to send rapid response troops to protect allies near Russia and Ukraine.

UPDATE: 10:03 pm-EST-NEW YORK (AP) - Relief flowed through Wall Street on Friday, even as deadly attacks continued to rage in Ukraine. Stocks rose, oil fell and investors turned away from gold and other traditional havens they favor when fear is high.

UPDATE: 12:12 pm-EST-BRUSSELS (AP) - The European Union has agreed to freeze the assets of Russian President Vladimir Putin and Foreign Minister Sergey Lavrov, according to Latvia’s foreign minister. A decision to freeze Putin and Lavrov’s assets indicates that Western powers are moving toward unprecedented measures to try to stop Russia’s brutal invasion of Ukraine neighbor and a major war in Europe. Latvian Foreign Minister Edgards Rinkevics said in a Tweet on Friday that he and the EU’s other foreign ministers adopted a second sanctions package and “the asset freeze includes President of Russia and its Foreign Minister.”He said the EU plans to prepare another package of sanctions.

(Farm Journal)

UPDATE: 11:33 am-EST-CNN Business is reporting China is relaxing restrictions on imports of Russian wheat. It says the decision to allow imports of wheat from all regions of Russia was made when Russian President Putin met with Chinese leader Xi Jinping during the Olympics earlier this month. It says the details of the plan were only announced by China’s customs administration this week. Russia is the world’s top producer of wheat. Previously, Beijing had restricted wheat imports from Russia out of concerns about dwarf bunt fungus.

UPDATE: 11:12 am-EST-Concern is growing about exports from the region, specifically fertilizer. Arlan Suderman of StoneX tweeting this:

(Farm Journal)

UPDATE: 11:10 am-EST-BRUSSELS (AP) - Council of Europe suspends Russia at Europe’s foremost human rights organization.

UPDATE: 10:15 am EST-John Deere Co. says its offices in Ukraine are now closed. John Deere told WQAD-TV “We are closely monitoring the developments in these countries and are actively assessing the potential impact to our people.” Deere officials report employees in Ukraine were evacuated at the start of the year.

UPDATE: 9:44 am EST-Global farm commodities trader Cargill Inc (CARG.UL) said on Thursday that an ocean vessel it chartered was “hit by a projectile” on the Black Sea, but that the ship remained seaworthy and all crew were safe and accounted for.

The incident occurred offshore from Ukraine on Thursday after Russia launched an invasion of the major grain-producing country where Cargill operates an export terminal.

UPDATE: 9:40 am EST-From Farm Journal’s Jim Wiesemeyer:

WSJ report: U.S. agriculture companies operating in Ukraine are closing offices and shuttering facilities there in response to Russia’s attack. WSJ details:

— Archer Daniels Midland Co. said Thursday that it had stopped operating its facilities in Ukraine, where, a company spokeswoman said, the crop trader and processor employs more than 630 people. ADM’s Ukraine facilities include an oilseed crushing plant in Chornomorsk, a grain terminal in the port of Odessa, six grain silos and a trading office in Kyiv.— Bunge Ltd. closed company offices as well as temporarily suspended operations at processing facilities in two cities in Ukraine, the company said Thursday. Bunge employs more than a thousand workers in Ukraine who operate two processing facilities as well as grain elevators and a grain export terminal in various parts of the country.— CHS Inc., a farm cooperative and major grain shipper and retailer of seeds and chemicals, said it has been drawing down its export activity in Ukraine for the past few weeks. It employs 46 people in the region but doesn’t own port operations in the country.

UPDATE: 8:43am EST-There were several key developments overnight: KYIV, Ukraine (AP) - The Kremlin says Russia is ready to send a delegation to Belarus for talks with Ukrainian officials. Ukrainian President Volodymyr Zelenskyy said he is willing to discuss a non-aligned status for Ukraine. Moscow has demanded Ukraine drop its bid to join NATO, and adopt a neutral status. Kremlin spokesman Dmitry Peskov said Friday that Russian President Vladimir Putin is ready to send the delegation in response to that offer.

Russian troops are bearing down on Ukraine’s capital, with gunfire and explosions resonating ever closer to the government quarter. The invasion of a democratic country has fueled fears of wider war in Europe and triggered worldwide efforts to make Russia stop. Amid growing casualties from the deadly warfare were increasing signs that Vladimir Putin’s Russia may be seeking to overthrow Ukraine’s government. It is his boldest effort yet to redraw the world map and revive Moscow’s Cold War-era influence. The U.S. and other global powers slapped ever-tougher sanctions on Russia as the invasion reverberated through the world’s economy and energy supplies. U.N. officials said they were preparing for millions to flee Ukraine.

Russian military says it has seized strategic airport outside Ukrainian capital; claims it cut Kyiv off from the west.

Pope Francis has made a personal, in-person visit to the Russian Embassy to “express his concern about the war,” in Ukraine. It was an extraordinary, hands-on gesture that came on the same day the Vatican announced he was canceling upcoming events because of an “acute” flareup of knee pain.Usually popes receive ambassadors and heads of state in the Vatican, and diplomatic protocol would have called for Francis, as the Vatican head of state, to summon the ambassador to him. For Francis to leave the Vatican and travel a short distance to the Russian embassy to the Holy See outside the Vatican walls was a sign of his anger at Moscow’s invasion of Ukraine and his willingness to appeal personally for an end to it.Vatican officials said they knew of no such previous papal initiative.

Twenty million dollars in U.N. humanitarian funds for Ukraine. A raft of new, stronger sanctions against Russia from Japan, Australia, Taiwan and others. And a cascade of condemnation from the highest levels. As Russian bombs and troops pounded Ukraine during the invasion’s first full day, world leaders began to fine-tune a response meant to punish the Russian economy and its leaders, including President Vladimir Putin’s inner circle. While there’s an acute awareness that a military intervention isn’t currently feasible, the strength, unity and speed of the financial sanctions - with the striking exception of China, a strong Russian supporter - signal a growing global determination to make Moscow reconsider its attack.

UPDATE: 5:22 pm EST-MOSCOW, Feb 24 (Reuters) - Russian President Vladimir Putin spoke by phone to French President Emmanuel Macron on Thursday and gave him an “exhaustive” explanation of the reasons for Russia’s actions in Ukraine, the Kremlin said.

The Kremlin said the call took place at Macron’s initiative, and he and Putin agreed to stay in contact.

Macron undertook strenuous diplomacy in recent weeks to try to avert a Russian invasion of Ukraine, including holding talks with Putin in the Kremlin.

UPDATE: 5:18 pm EST-President Biden has sent out the following tweet, saying that sanctions imposed on Russia are already having an effect.

(Farm Journal)

UPDATE: 5:11 pm EST- WARSAW (AP)- Some of the first refugees from Ukraine have arrived in European Union member Poland by road and rail.

A scheduled train from Kharkiv in eastern Ukraine arrived Thursday afternoon in the Polish town of Przemysl, near Ukraine’s western border, carrying a few hundred passengers.

The passengers of various ages, arriving with bags and backpacks, told The Associated Press they were fleeing war. Some live in Poland and were returning urgently from visits to their homeland.

The chief of Poland’s border guards, Gen. Tomasz Praga, said there was a visible increase in the number of people wanting to cross into Poland.

Officials said Poland has prepared at least eight centers with food, medical care and places to rest.

Polish Prime Minister Mateusz Morawiecki said that “innocent people are being killed” in Ukraine and appealed to the Poles to extend every possible assistance to the Ukrainians who have found themselves in need of help.

UPDATE: 4:31 pm EST-NEW YORK (AP) - U.S. markets stabilized and ended higher Thursday after an early swoon brought on by Russia’s invasion of Ukraine. Technology stocks, in particular, rebounded strongly, erasing an early drop of 3.4% in the Nasdaq and leaving the tech-focused index up 3.3%. The S&P 500 also came back from an early loss and ended up 1.5%. Oil prices had surged earlier but ended with moderate gains.

UPDATE: 3:44 pm EST-KYIV, Ukraine (AP) - Ukraine’s health minister: 57 Ukrainians killed as a result of the Russian invasion, 169 more wounded.

UPDATE: 3:00 pm EST-Farm Journal Live-analysis of what has transpired today in Ukraine. AgDay’s Clinton Griffiths hosts a panel discussion with Standard Grain’s Joe Vaclavik and Dan Basse of AgResource Company. See what they had to say about the market moves today and what to watch going forward. Click here .

UPDATE: 2:36 pm EST-Key points from President Biden’s speech:

-President announced a new round of sanctions targeting Russian banks, oligarchs, and high-tech sectors

-Says Putin “chose this war” and that his country will bear the consequences of his actions

-U.S. will be deploying additional forces to Germany to help NATO

-President Biden held off on cutting Russia out of the SWIFT payment system. It allows the transfers of money from bank to bank around the world

-No sanctions were announced on Russia’s energy sector

UPDATE: 2:25 pm EST-WASHINGTON (AP) - US sanctions Belarusian banks, defense industry, security officials over support for Russian invasion of Ukraine.

UPDATE: 2:01 pm EST-WASHINGTON (AP) - Biden says US deploying additional forces to Germany to bolster NATO in face of Russian invasion of Ukraine.

UPDATE: 1:50 pm EST-WASHINGTON (AP) - Biden: ‘Putin chose this war’ in Ukraine, and he and Russia ‘will bear the consequences’ of new sanctions.

UPDATE 1:22 pm EST-President Biden expected to address the nation at any moment. Watch it here .

UPDATE: 12:55 pm EST -KYIV, Ukraine (AP) - A presidential adviser says Ukraine has lost control of the Chernobyl nuclear site after a fierce battle.

UPDATE: 12:33 pm EST - (Reuters) - Global agricultural commodities trader Bunge Ltd. (BG.N) said Thursday it has shuttered company offices in Ukraine and temporarily suspended operations at two oilseed crushing facilities in Nikolaev and Dnipro following a Russian military invasion.

Bunge employs more than 1,000 people in the country and also owns and operates grain elevators and an export terminal in Ukraine, the company said. It also operates a corn milling plant via a joint venture.

UPDATE: 12:30 pm EST - MOSCOW (AP) - Russia gave its first confirmation that its ground forces have moved into Ukraine, saying troops entered from Crimea.

UPDATE: 11:35 am EST -UNITED NATIONS (AP) - US official: UN Security Council to vote on resolution condemning Russia’s attack on Ukraine despite expected veto.

UPDATE 11:18 am EST - From The Associated Press: A senior U.S. defense official says Thursday’s attack by Russia appears to be the first phase in what will likely be a multi-phased, large-scale invasion.

The official said it began around 9:30 p.m. U.S. EST, with land- and sea-based missile launches. The official said that roughly more than 100 missiles, primarily short-range ballistic missiles, but also medium-range ballistic missiles, cruise missiles, surface-to-air missiles and sea-launched missiles, were launched in the first few hours of the attack.

The official said the Russians are moving on three axes: From Crimea to Kherson, from Belarus toward Kyiv, and from the northeast to Kharkiv.

The official, who spoke on condition of anonymity, said it’s not clear how many Russian troops are in Ukraine now, and the main targets of the air assault have been barracks, ammunition warehouses and 10 airfields. The official said Russian ground forces began to move into Ukraine from Belarus around 5 a.m. EST.

UPDATE 11:11 am EST - White House tweets photo of President Biden meeting with the National Security Council in the White House Situation Room:

(Farm Journal)

UPDATE: 10:36 am EST- AgDay’s Clinton Griffiths just spoke with Farm Journal Washington Analyst Jim Wiesemeyer about what’s happening in Ukraine, and what to watch for next.

UPDATE 10:26 am EST-Tweet from Ukrainian President Volodymyr Zelenskyy:

(Farm Journal)

UPDATE 10:22 am EST-Ukraine’s deputy interior minister Anton Gerashchenko just made the following post on Facebook:

(Farm Journal)

UPDATE: 10:08 am EST- President Biden will address Russia’s attack on Ukraine at 12:30 pm EST. You can watch it live here .

UPDATE: 10:03 am EST- The U.S. government is now on high alert for possible Russian cyberattacks. A senior FBI cyber official is warning businesses and local government they should be vigilant against potential ransomware attacks. In fact, some of the biggest cyberattacks against U.S. infrastructure in the past two years have been linked to suspected Russian hackers.

UPDATE: 9:49 am EST- The S&P 500 sank 2% on opening. It’s now down almost 14% from the record high it set in early January. Here’s a look at the big commodity moves happening right now:

March corn:

(Farm Journal)

March soybeans:

(Farm Journal)

March wheat:

(Farm Journal)

UPDATE: 9:38 am EST- A White House official says that President Biden met with the National Security Council this morning in the Situation Room to discuss the situation going on in Ukraine. The President is expected to address the nation this afternoon, during which he is expected to announce “further consequences” the U.S. and its allies will impose on Russia. Click here to read the latest statement from the White House. Markets continue to move. Follow them here .

UPDATE: 9:33 am EST- Dow sinks nearly 800 points following the attack on Ukraine.

UPDATE: 9:21 am EST- Ukraine’s military has now suspended operations at its ports because of the invasion by the Russian military, furthering concerns about the flow of supplies out of the area. Reuters reports that Russia had earlier suspended movement of commercial vessels in the Azov sea until further notice but kept Russian ports in the Black Sea open for navigation.

“The market is still struggling to get a clear picture about the actual military situation on the ground. The ports in the Azov and the Black Sea so far seem not to have been damaged according to the initial shipping agency reports,” one European grain trader told Reuters.

Russia produced 76 million tonnes of wheat last year and is expected by the U.S. Department of Agriculture to export 35 million tonnes in the July-June season, 17% of the global total.

UPDATE: 9:11 am EST- The financial and commodity markets reacted strongly to word that Russian President Vladimir Putin had launched military action in Ukraine. Global markets tumbled overnight and U.S. markets pointed toward a sharply lower open. Oil prices jumped by more than $7 per barrel, climbing above $100 a barrel, and futures for Wall Street’s benchmark S&P 500 index and the Dow Jones Industrial Average were off by more than 2.5%.

Market benchmarks in Europe and Asia fell as much as 5%.

Meanwhile, commodities such as corn, soybeans and wheat soared. Soybean prices rose above $17. Wheat prices surged past a nine-year high and are now up 20% since the start of the year.

Russia is the world’s largest wheat exporter and, together with Ukraine, supplies more than a quarter of the world’s wheat exports. There’s concern about supplies from both countries being disrupted because of military action.

Experts say that, with wheat being a staple element for human and livestock diets, any disruption can have an impact on prices.

Besides reaction from the financial markets to the situation, world reaction has been swift.

The North Atlantic Treaty Organization’s Secretary-General Jens Stoltenberg says Russia has launched a war on Ukraine and shattered peace on the European continent. Stoltenberg is now calling for a summit of NATO alliance leaders for Friday.

The European Union says it is planning the “strongest, the harshest, package” of sanctions it has ever considered.

European Commission President Ursula von der Leyen said “the target is the stability in Europe and the whole of the international peace order, and we will hold President (Vladimir) Putin accountable for that.”

An adviser to Ukraine’s president says about 40 people have been killed so far in the Russian attack on the country. There are reports of airstrikes or shelling on cities and bases in the country, with people in Ukraine attempting to flee by piling into trains and cars.

This is a developing story. Keep watching for updates.

Russian Invasion of Ukraine Overtakes Other Washington Issues as Congress Returns this Week

Mon, 28 Feb 2022 16:41:09 GMT

The House and Senate both return Monday, but to a very different situation due to Russia’s invasion of Ukraine, which is expected to be one of the key issues President Joe Biden talks about during his March 1 State of the Union (SOTU) address. President Vladimir Putin on Sunday ordered Russian nuclear deterrent forces put on high alert Sunday in response to what he called “aggressive statements” by leading NATO powers. Late-breaking news Sunday morning broke that Ukraine President Volodymyr Zelenskyy agreed to negotiate with the Russians, but fighting continues across Ukraine.

Besides Russia and Ukraine, Biden’s SOTU address could take the opportunity to adjust his Covid policy along the lines of the United Kingdom, which last week lifted all remaining COVID-19 restrictions, including a legal requirement that those infected with the virus self-isolate, as Prime Minister Boris Johnson looks to fully reopen the British economy and society two years after the pandemic hit. Johnson said that with the virus on the wane, government-mandated rules are no longer necessary to stop the spread of COVID-19.

Biden will address a nation that largely sees the economy worsening under his watch, disapproves of his leadership on key issues and currently prefers that Republicans control Congress after the November elections, according to a Washington Post-ABC News poll. The poll finds Biden’s presidential approval rating at a new low, with 37% saying they approve of the job he is doing and 55% saying they disapprove. Link for details. Asked whether they would prefer the next Congress to be in the hands of Republicans acting as a check against the president or in Democratic hands to support Biden’s priorities, 50% say they would rather have Republicans in charge on Capitol Hill while 40% prefer the Democrats. On the question of how they would vote in House races if the election were held today, 49% of registered voters say they would support the Republican candidate while 42% say they would vote for the Democratic candidate. The WaPo notes that for comparison, just ahead of the 2018 midterm elections, which saw Democrats score big gains and capture control of the House, it was Democrats who enjoyed a seven-point advantage on this same question.

Biden will also focus on his push for carbon mitigation programs and will likely say agriculture will play a big role in that effort. Congress wants to fund climate change language by around $400 bil. in a revised--and likely newly named--Build Back Better measure. Vilsack has said carbon mitigation could be agriculture’s next revenue stream. But farmers know payouts under any such program must be higher than initial signals.

Biden will attempt to soothe a worried nation faced with geopolitical concerns (Russia, China, Iran, etc.) inflation and rising interest rates once the Fed starts hiking them in March while also beginning to reduce the Fed stimulus, upping fears of a potential downturn in the U.S.... and perhaps world... economy later this year.

Crisis in Ukraine

Key updates on Russia’s invasion of Ukraine since Saturday’s special report ( link ): Street fighting broke out in the center of Kharkiv as Russian troops entered Ukraine’s second-largest city.

Russian President Vladimir Putin said in a televised statement on Sunday that he was ordering Russia’s nuclear deterrent forces on alert, as he continues his unprovoked invasion of Ukraine. Speaking alongside his defense minister and military chief of staff, Putin said recent sanctions and “aggressive statements” from NATO countries had led him to put the nuclear deterrent forces in a “special regime of combat duty.” This is the second time Putin has alluded to Russia’s nuclear arsenal while effectively warning the West to back off. In a statement at the onset of the invasion, Putin said anyone who tried to “hinder us” would face “such consequences that you have never encountered in your history.”
Israel offers to mediate, broker ceasefire between Russia & Ukraine. Israeli Prime Minister NaftalIsraeli Prime Minister Naftali Bennett told Russian President Vladimir Putin in a phone call Sunday he would offer an attempt to mediate and broker a ceasefire between Putin and Ukraine’s President Volodymyr Zelensky, the Kremlin said. Israel has attempted to take a moderate tone on the Russian/Ukrainian crisis. Foreign Minister Yair Lapid has condemned Russia, but Prime Minister Naftali Bennett has been careful to speak only of his support for the Ukrainian people.
Ukraine’s President Volodymyr Zelenskyy agreed to negotiations with Russia “without preconditions” even as Russian troops bore down on Kyiv and continued their thrust around a number of cities across the country. A statement issued to Zelensky’s official channel on the Telegram messaging app said the Ukrainian government would dispatch a delegation to meet with its Russian counterparts on the Ukrainian-Belarusian border, near the Pripyat River. Link to details via the L.A. Times.
If Russia succeeds in taking Kyiv, it will face a protracted, deadly insurgency backed by countries friendly to Ukraine, Douglas London predicts at Foreign Affairs ( link ). “Putin has badly miscalculated by invading Ukraine,” Melinda Haring writes for the same magazine. “He may find it easy to pull off a swift invasion, but then comes the hard part. The Ukrainian people will never allow Moscow to chart their course or pick their president. The desire for freedom is ineffable, and Ukrainians have proved that they are willing to die for it.” As for Russians, the Economist writes ( link ) that Russians do not seem at all enthusiastic: “The somber, shamed mood in Moscow could hardly be more different from the euphoria that gripped it in 2014 when Putin seized and annexed Crimea,” the magazine observes.
EU, U.K., Canada, U.S. plan to cut some Russian banks from Swift. The European Union, U.K., the U.S. and Canada announced powerful new sanctions plans, including taking some Russian banks off the Swift financial network and taking measures to paralyze the activities of Russia’s central bank over the Kremlin’s attack on Ukraine. “Russia’s war represents an assault on fundamental international rules and norms that have prevailed since the Second World War, which we are committed to defending. We will hold Russia to account and collectively ensure that this war is a strategic failure for Putin,” the leaders of the Group of Seven (G7) countries wrote in a joint statement that outlined the new measures. Additionally, the leaders committed “to imposing restrictive measures that will prevent the Russian Central Bank from deploying its international reserves in ways that undermine the impact of our sanctions.”

Background: The Belgium-based system is run by its member banks and handles millions of daily payment instructions across more than 200 countries and territories and 11,000 financial institutions. Iran and North Korea are cut off from it. Link to WSJ backgrounder on SWIFT.
G7 countries, all democracies, also vowed to limit the ability of Russian oligarchs with ties to Putin’s government to buy citizenship in other countries and to access their financial systems. They also announced the creation of a task force to oversee the implementation of the new sanctions.
Germany is going to send thousands of weapons to Ukraine, marking a complete reversal in Berlin’s restrictive arms export policy, with Chancellor Olaf Scholz pledging a jump in military spending and a revamp of the armed forces.

Russian Invasion is Bad News for U.S. Meat Consumers, Steiner Says

Fri, 25 Feb 2022 14:53:42 GMT

Will the expected sanctions on Russia impact global meat trade and demand? Steiner Consulting Group posed this question in the Feb. 24 Daily Livestock Report .

“A while back, Russia was a major buyer of proteins in the world market. We still remember when prices for chicken leg quarters in the U.S., or the price of beef in Brazil, would be greatly affected by events in Russia. That is no longer the case,” Steiner Consulting Group wrote.

In the last decade, Russia has become self-sufficient in providing its own meat protein. According to USDA’s Foreign Agricultural Service data, as recently as 2010, Russia relied on pork imports for about a third of its pork consumption. However, in 2021, USDA points out that Russian domestic pork consumption was 26% higher than in 2010 and the country is now a net exporter of pork.

Despite African swine fever (ASF) outbreaks during this time period, Russia increased its domestic pork output by 86% and completely eliminated its dependence on imports, Steiner Consulting Group said.

In the early 2000s, more than half of the chicken that Russian citizens consumed came from imports. By 2010, Russia’s imported share had dropped to 27% and last year imports accounted for just 5% of consumption. Meanwhile, Russia exported almost as much chicken as it imported. Since 2010, Russian domestic chicken consumption has increased 36% while domestic chicken production increased 67%.

Meanwhile, beef has been a more difficult protein to secure within Russia considering land limitations and domestic preferences. Russian beef consumption has declined 32% since 2010 and domestic production is 5% lower than it was 11 years ago.

“Russia still buys beef in the world market, but that volume is down 67% from where it was in 2010 and even smaller than it was in 2006 or 2007 (before the financial crisis). Most of the beef that Russia bought in 2021 came from two sources: Paraguay and Belarus,” Steiner Consulting Group wrote.

Russian imports from Belarus are unlikely to be affected by Russia’s invasion of Ukraine. Steiner Consulting Group believes the impact from a reduction in South American imports is likely to be minimal on global trade.

“Bottom line: Impact from restrictions on Russian protein purchases in the world market are likely to have no impact on global trade,” Steiner Consulting Group said. “However, Russia and Ukraine are major contributors to global grain and oil trade, and they are also major suppliers of fertilizers. High feed and energy costs are negative for U.S. livestock producers, and they will negatively impact their ability to bring more product to market. Ultimately this is bad news for U.S. meat protein consumers.”

Steiner Consulting Group said what’s even more uncertain is how a further spike in inflation could impact domestic and export demand.

“In this context, high-priced proteins, like beef, face more downside risk than pork or chicken,” Steiner Consulting Group wrote.

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Here's Why the Russia-Ukraine Crisis Creates a Realignment of World Trade

Fri, 25 Feb 2022 13:19:03 GMT

The war of words turned into an escalating situation Thursday as Russia invaded Ukraine . The news sent wheat prices skyrocketing 50 cents higher, with corn up 30 cents at one point Thursday. Crude oil also soared above $100 per barrel, hitting the highest level since 2014.

Dan Basse of AgResource Company says the situation fueled commodities, as two major grain producers were thrown into chaos and uncertainty. And as that happened, it elevated the U.S.

“It’s really a realignment of world trade,” says Basse. “What we don’t know about, of course, is the sanctions. The Russians have also threatened that if another country were to blockade the Bosphorus (the Strait of Istanbul), which is the feeder of all the grain coming down, that they would take actions against that country. So there’s a lot we don’t know yet. But when you think about 31% of world wheat trade being domiciled in Ukraine and Russia, 30% of world barley trade, and then somewhere around 29% of ‘sunoil’ trade, it’s a really big deal.”

President Joe Biden addressed the U.S. on Thursday, saying new economic measures would “limit Russia’s ability to do business in dollars, euros, pounds and yen and be part of the global economy.”

Basse says even with the uncertainty, more demand could flow to the U.S.

“The U.S. farmer’s prominence has really stepped forward today regarding his position to feed the world. And a Chicago Board of Trade is reflecting that with new rally highs. But if we looked at China, a new record high last night in corn and soy meal, palm oil has shot up to new record highs. So all of this is occurring at a time when the world is already looking at tight stocks, and this just exacerbates it,” Basse adds.

Basse says a worst-case scenario would be an extended conflict that lasts months. He says if that happens, it could hinder Ukraine’s ability to plant the upcoming crop.

“This would be the worst-case scenario in a world where stock use ratio of the major exporters are sitting at record lows,” says Basse. “The best-case scenario would be, let’s say, that the Russians have gone in, and in a matter of a week, they kind of tidy things up, and the Ukrainians say, ‘Okay, we’ve done this before, you know, it’s only some 20 years ago that you were our leaders, and we’ll kind of accept you for now.’ But I think there will still be these skirmishes, but that would be the best case. And then at that point, you know, the Russians may come back and say, ‘Okay, to get back our customers in the world, we’re really going to drop our corn, wheat and soy prices, such that we buy back demand.’ That would have a very big impact on the market.”

Basse points out the geopolitical back and forth will be at the forefront, which is why the situation fueled commodity prices overnight.

So, what’s Basse’s advice for farmers right now who are experiencing the extreme price volatility?

“I want them to take an exhale for the moment and just kind of breathe normally,” says Basse. “And then I want them to look at their revenue insurance price, which will be calculated as of Monday. And that will be a baseline that will give you comfort to the downside. We’re hoping that revenue insurance for corn and soybeans in particular will be record high. So you know, participate in that probably to the fullest degree. Then, I want to look at maybe marketing strategies like buying puts or something that gives you some opportunity to still command the upside. Because sometimes in the farming business, we need to maximize profits. And this appears, as I said, to be one of those years where the American farmer’s profile has just taken a big leap on the world stage. We need to feed the world.”

Basse says producers can protect the downside through revenue insurance, as well as put options. He says the key is to not limit the upside potential. The veteran market analyst says the markets are navigating uncharted waters with the situation at hand.

“When I go back and think about the collective farming system in Russia back when it collapsed in the ‘70s, and they came forward with their gold bars, that’s the closest I can find to where we are today,” says Basse. “And then American farmers, you know, really leapt into prominence during that time frame. Now remember, back then soybeans rallied almost to the teens, and back in the ‘70s that was like seen as unbelievable. The same in corn, making it to $4 and wheat up close to $9. So, if there was a U.S. weather problem this year, I don’t know how high is high. But at the same point we as farmers have to manage our risk and manage profitability, and so I’m trying to find marketing tools that will allow us to do that without limiting our upside risk. Because if we do have a U.S. weather problem, these markets are gonna stay very heated. This is not a one and done.”

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Putin Retaliates Against Sanctions With Food-Import Limits

Wed, 11 Nov 2020 04:59:28 GMT

Russia will ban billions of dollars worth of food imports from the U.S. and other nations in retaliation for sanctions over the turmoil in Ukraine.

Russian President Vladimir Putin today ordered restrictions on food and agricultural imports for one year from countries that have imposed or supported sanctions against Russia, according to the Kremlin website.

Russia is embroiled in the worst standoff with the U.S. and its allies since the Cold War over Ukraine, where government troops are cracking down on separatist strongholds in the east. The U.S. and the European Union targeted the Russian economy, expanding penalties last week, joined by Canada, Japan, and Switzerland, after the downing of a Malaysian Airlines System Bhd. passenger jet in Ukraine’s rebel-controlled area.

Putin has refused to bow to sanctions, aiming with today’s measure “to protect national interests,” according to the decree. He called on the government to increase domestic supplies with the help of producers and retailers and to avoid spurring food-price growth.

U.S. Response

“Retaliating against Western companies or countries will deepen Russia’s international isolation, causing further damage to its own economy,” Laura Lucas, a spokeswoman for U.S. President Barack Obama’s national security council, said in an email. “We continue to call on Russia to take immediate steps to deescalate the conflict and cease its efforts to destabilize Ukraine.”

The Russian government is drawing up a list of restricted goods. It plans to ban the import of all U.S. agricultural products, including poultry, as well as all fruit and vegetable imports from the European Union, according to a report in RIA Novosti citing Alexey Alekseenko, spokesman for Russian food safety watchdog Rosselkhoznadzor.

“The decision is not as critical as it looks at first glance,” Elena Tyurina, director of the Institute of Agrarian Marketing, said by phone in Moscow. “Many foodstuffs are imported from Latin America, Arab countries and Asia. We’ll be eating fewer apples and more bananas, oranges and kiwis.’

Russia imported $43.1 billion of food and raw agricultural materials last year. Of that, $36.9 billion came from countries outside of the former Soviet republics in the Commonwealth of Independent States, according to Federal Customs Service data.

EU Imports

EU members the Netherlands, Germany and Poland are among Russia’s 15 biggest food suppliers, as is the U.S., the U.S. Department of Agriculture said in a July 31 guide for exporters, citing data from the Global Trade Atlas.

About three-fifths of all U.S. farm exports to Russia this year have been soybeans, poultry and pork, according to USDA data. Even before the decree, Russia’s public health regulators banned some imports from EU member countries, the U.S. and Ukraine, in what those nations have called a veiled form of trade protectionism.

‘‘America’s farmers and ranchers would have been more surprised if they hadn’t announced a ban,” said Dale Moore, public policy director for the American Farm Bureau Federation, the biggest U.S. farmer group. “Russia does so regularly for seemingly small reasons, and now they have to deal with sanctions. This is a typical reaction by Russia.”

Bunge, Cargill

The U.S., the world’s biggest exporter of farm products, shipped $1.6 billion of food to Russia in 2013, or 4 percent of that country’s total imports, according to the USDA. Total farm- product exports from the U.S. will be a record $149.5 billion for the fiscal year that ends Sept. 30, the USDA said in May. The department projected sales to Russia of $1.3 billion, slightly more than the Dominican Republic in that period.

Bunge Ltd., the world’s biggest soybean processor, said in an e-mail that the White Plains, New-York-based company exports a small amount of soy meal to Russia and won’t be materially affected by the ban. Archer-Daniels-Midland Co., Cargill Inc. and Tyson Foods Inc., the top U.S. grain and meat companies, declined to comment.

“Russia, while very important, is only one of hundreds of our customers worldwide.” Ray Graeser, president of the American Soybean Association, said in an e-mail. “Sanctions and bans like the one proposed by President Putin serve only to hurt the Russian people by limiting their access to the food and products they need and want.”

Arms Shipments

Russia’s list of banned goods will be published no later than tomorrow, said Natalya Timakova, spokeswoman for Prime Minister Dmitry Medvedev in a telephone interview, declining to elaborate. The list will be flexible, allowing for revisions in goods and timing, according to the decree.

The limitations will include vegetables, fruits, meat products, and exclude wine and baby food, the Russian newspaper Vedomosti reported, citing an unidentified government official. Some dairy products will also be restricted, the newspaper said, citing another unidentified official.

The ruble, which has weakened 9.1 percent against the dollar this year, is among the 10 worst-performing currencies, according to data compiled by Bloomberg. It depreciated 0.3 percent to 36.1775 against the greenback at 6 p.m. in Moscow.

Food Prices

Import restrictions have a “direct effect” on food prices, keeping them high despite a deceleration in the cost of fruits and vegetables, Maxim Oreshkin, head of the Finance Ministry’s strategic planning department, said Aug. 4 on its Facebook page.

Imported goods account for as much as 25 percent of retail sales in Russia, Andrey Karpov, executive director of the Retail Companies Association, said by phone. The country already provides about 90 percent of its own poultry, he said.

Inflation as the biggest challenge facing Russia, a poll published by the state-run VTsIOM research center July 10 showed. While consumer-price growth decelerated for the first time this year in July, the rate remained above the central bank’s target for the 23rd month. The central bank declined to comment on the decree.

“I can’t yet tell whether it’s a benefit or a threat,” said Dmitry Vostrikov, head of development at Russia’s food producers lobby, Rosprodsoyuz. “We’ll need to wait for a detailed list from the government.”

Tyurina said domestic producers will provide the nation with its basic food needs and Putin’s decision may act as stimulus.