I watched a webinar not too long ago offered by three College of Illinois ag professors by way of the Farmdoc web site. The purpose of the webinar was to provide producers an replace on how the Russian-Ukrainian battle might influence commodity costs and crop insurance coverage choices earlier than the March 15 crop insurance coverage deadline.
Farmers who had been taking part within the webinar had been involved about many issues together with fast inflation, provide chain disruptions, recession in the USA, and the Russian invasion turning right into a wider battle. In truth, over 90% of the webinar members polled felt that inflation was a significant concern.
The presenters consider that the worldwide wheat provide will probably be impacted excess of different crops. Russian Federation and Ukrainian wheat accounted for practically 30% of worldwide wheat exports over the last 5 years on common. Russia is the No. 1 wheat exporter on the planet, and Ukraine is fifth. They account for a smaller however nonetheless good portion or corn exports, at round 17%. (Soybean exports from these two nations had been solely 2% of worldwide exports.)
If the breakdown of relations continues between Russia and the West, Russian and Ukrainian wheat provides could also be offered solely to nations pleasant towards Russia. It will clearly change who’s shopping for wheat from whom in some ways, and Russian tanks driving round on the Ukrainian winter wheat crop will not be going to assist world provide for 2022.
Fertilizer costs rising world wide
The presenters stated that fertilizer costs had been rising world wide, and provide shortages of fertilizer might spell hassle for sure nations. Surprisingly, Brazil will get over 90% of its nitrogen and potash from imports and about 75% of its phosphate. And, a big portion of these fertilizers comes from Russia and China.
The U.S. is just importing 9% to 12% of its nitrogen and phosphate, however we’re importing 93% of our potash. Fortunately, 83% of that’s coming from Canada and solely about 12% is coming from the mix of Russia and Belarus, which is mainly managed by Russia.
The Farmdoc of us acknowledged, “fertilizer shortages are actual,” and so they anticipate excessive fertilizer prices a minimum of by way of 2023. Some producers have locked in decrease fertilizer costs upfront of this planting season, however I’ve to surprise if all provides will probably be the place they’re alleged to be after they’re alleged to be there (no matter authorized contracts).
Anhydrous ammonia, which requires pure fuel, has roughly doubled in worth per ton over the last yr. This clearly raises present yr corn manufacturing prices. Nonetheless, the presenters stated that corn costs and anticipated yields imply that corn is the favored crop in all areas of Illinois, despite nitrogen provide considerations.
Throughout the webinar, producer members had been polled, and 58% of them anticipated no change of their planting methods for 2022. This is smart as a result of it’s getting late within the season to vary plans.
What does all of this imply for crop insurance coverage?
The presenters stated that insurable costs are excessive, which favors income safety crop insurance coverage. Insurance coverage premiums are up attributable to increased grain costs however price it to cowl the chance. They advised the way in which to play crop insurance coverage this yr is to get 75% to 85% protection on a income safety coverage. You may plug in numerous variables and work out what is smart in your operation utilizing a slick crop insurance coverage evaluator device that you will discover at farmdoc.illinois.edu beneath the heading “Instruments.” They’ve six completely different crop insurance coverage instruments, and lots of different useful merchandise, together with particulars of CBOT futures pricing.
Backside line: The world is altering extra quickly than we’ve seen in many years, and also you’re going to need to be nimble with planting, buying, and insurance coverage choices.
Supply: Successful Farming