What Russia’s War in Ukraine Means for Washington’s Wheat Market | Local company

Daisy Zavala The Seattle Times

Mike Carstensen has seen prices for the wheat he grows on his Lincoln County farm rise from $8.16 in January to $9.26 a bushel, although the price fluctuates. That’s a nice increase, he said, but it’s not enough to offset the one-third increase in costs due to rising gasoline prices over the same period.

Both appear to be fallout from the Russian invasion of Ukraine, one of the world’s largest wheat exporters.

U.S. wheat prices were already high due to inflation and tight supplies, but Russia’s invasion of Ukraine has pushed up wheat prices around the world and could push up U.S. wheat prices even further. said Randy Fortenbery, Thomas B. Mick Professor of Economics at Washington State University. .

Russia and Ukraine supply nearly 30% of the world’s wheat from vast and fertile agricultural lands in the Black Sea region known as the “breadbasket of the world”. But last week Ukraine banned the export of wheat, oats and other staples to avert a “humanitarian crisis” among its people, according to a government statement.

People also read…

As the war and Ukraine’s wheat export ban threaten global supply, U.S. wheat farmers are also concerned about rising production costs. It’s still too early to tell how disruptions in the global wheat market will affect Washington wheat farmers.

Demand that is sure to increase due to the situation in Ukraine will continue to drive up prices for overseas buyers, said Glen Squires, CEO of the Washington Grain Commission.

Prices vary by market and grain type, but in recent days the cost of soft white wheat, the main grain class grown in Washington, was $11.70 a bushel. Last year it was about $7.35 in the lower Columbia River District, Portland and Vancouver, Squires said.

While it may seem that higher prices could be a good thing for American farmers, including those in the Pacific Northwest, rising production costs, such as fertilizers, pesticides and mechanization, among other things, reduces profits, Carstensen said.

Oregon Liquor Stores and Fred Meyer withdraw Russian-produced spirits in solidarity with Ukraine

“We are price takers and cannot pass on any increase in input cost,” he said.

Even before last week’s export ban, there were concerns about global food shortages and further price increases, as Ukrainian farmers have no choice but to neglect their farms and flee in an attempt to stay alive or fight to remain sovereign, according to the Associated Press. .

According to data from the Washington State Grain Commission, wheat is a staple food for more than 35% of the world’s population and provides 20% of global nutritional needs.

Countries that rely on wheat exports from Ukraine could face shortages from July, increasing food insecurity and potentially pushing more people into poverty in countries that depend on the product, the AP reported. .

Next year, people could shift to more affordable grains and wheat alternatives, Fortenbery said, which could potentially affect wheat prices, but it’s too early to tell exactly how the dispute will affect the market.

Washington’s winter wheat was already in the ground when the war broke out on February 24, and the acreage for spring wheat is smaller, so there isn’t much room for growers to increase production, Fortenberg said.

In 2020, Washington’s wheat production neared an all-time high, he said. But the drought made 2021 the lowest production since 1964.

Fortenbery said there could be an increase in wheat production in 2023 across the country if officials chose to meet market demands.

But even if more were planted in the near term or in 2023, it wouldn’t be enough to offset what Ukraine supplies to the global market, Fortenbery said.

And, it’s hard to say if it would make much of a difference to farmers in Washington.

About 90% of the wheat produced in Washington is exported, largely to markets in Japan and the Philippines, according to the Washington State Department of Agriculture. Russia and Ukraine export wheat to countries in the Middle East and North Africa.

Longview sees 44 cent increase in gas prices in a month after Russia invades Ukraine

Markets served by Ukraine are not necessarily influenced by the quality of wheat or grains like U.S. markets overseas, said Stephen Van Vleet, regional agricultural extension and natural resources specialist at the University. of Washington State.

Farmers are used to dealing with fluctuating prices. Still, the current state of the markets is very volatile, said Ben Barstow, a farmer in West Palouse.

“This whole situation is concerning,” Barstow said. “It’s just unpredictable.”

The cost of energy, oil, gas and fertilizer, to name a few, has also increased for Barstow, adding to the long list of expenses.

“It’s so bad I didn’t even watch,” he said. “I’m just going to have to pay what it costs.”

Seattle Times news researcher Miyoko Wolf contributed to this story.

Copyright 2022 Tribune Content Agency.