Specialist
Agricultural Economist at University of Illinois
Agenda
- Potential impact of Russia-Ukraine situation on global ag commodity markets, including corn, wheat and fertiliser
- Supply expectations, inventory dynamics and buying behaviours from China, historical and expected
- Expectations around increase in US crop land acreage, and dynamics around switching soybean crop to corn in light of Russia-Ukraine
- Impacts of fertiliser, ethanol and livestock feed pricing
Questions
1.
What are the biggest contributing factors to current cyclical high pricing in corn and soybean?
2.
Are you expecting China to be a big buyer of US corn again in 2022? I know that we can’t necessarily trust the accuracy of where China ended 2021 with its inventories.
3.
Wouldn’t you expect Ukraine’s crop to be significantly reduced vs historically due to the geopolitical actions and climate within the country?
4.
Who would be typically the buyers of Ukrainian corn? Is the US most likely to replace that volume if Ukrainian corn is diverted towards Russia or China?
5.
What further sanctions be placed on Russia? What would that mean for the corn, wheat and fertiliser markets, given Ukraine is a major fertiliser producer? It seems any sanction will likely come with incredible inflationary costs.
6.
Do you think there is a formal agreement between Russia and China for China to backstop any potential agriculture commodities sales that would have typically gone elsewhere? It makes sense, given that China is in need of corn and certainly fertiliser.
7.
How much of a volume gap would Russian corn and wheat leave in the global market, assuming that those volumes will only flow to China?
8.
Do you think North American farmers are watching the Russia-Ukraine situation unfold and thinking about how much acreage they can switch from soybean to corn?
9.
Do you think the Russia-Ukraine situation won’t impact soybean pricing, or could it be very minimal?
10.
It seems corn prices will continue to rise. Is it feasible to start thinking about USD 10 corn? Do you think that’s where prices are heading if the Russia-Ukraine situation continues to escalate? You highlighted low inventories in the US and Brazil, and Argentina had an underwhelming crop for its second growing season.
11.
Does Brazil have the ability to make up a significant chunk of the corn crop Ukraine would typically produce? Is that by adding acreage or converting acreage from soybean?
12.
I read in data from WASDE [World Agricultural Supply and Demand Estimates] that there was slight uptake in corn inventories from 2020 to 2021, but still low relative to historical ending inventories. Is that a fair assessment?
13.
How much acreage is there in flux in any given year, between whether a farmer chooses to plant soybeans or corn? How significant a shift might there be towards one or the other in any given year due to the pricing environment?
14.
Can you discuss the key considerations around the exorbitant cost of fertiliser? Are we getting to a point where farmers will just stop investing in their fertiliser, even with ag commodities as high? There will obviously be fertiliser purchased, but you would think that pricing gets to a point where it’s just not feasible for a farmer to continuously invest in fertiliser to get a better yield.
15.
It seems ethanol prices will increase as well due to the Russia-Ukraine situation. How should we be thinking about corn’s role in the ethanol market and ethanol prices going forward?
16.
Am I right in suggesting that volume and demand for corn used in livestock feed have been steadily increasing in recent years? Do you expect a steady increase to continue?
17.
Are there any additional crop inflationary costs or other factors that we should be talking about that we didn’t cover?
18.
Would you expect Brazil farmers to be converting acreage to corn and increasing acreage of corn, or at this point is that too late and this is just a yield discussion?
19.
Do you think we will get useable data out of Ukraine at some point, to determine what its planted crop is? Will we have an idea in the next several weeks of how much of a hole will be left in the global corn market due to Ukraine’s annexation?
20.
Who would typically be the major buyers of Ukrainian corn?
21.
Do you have anything else you’d like to discuss?
