Grain, oil, fertilizer prices jump on Ukraine invasion

FILE - Harbor cranes are seen in Mariupol trade port in Mariupol, south coast of Azov sea, eastern Ukraine, Sunday, Dec. 2, 2018. Andrey Stavnitser, CEO of the port operator TIS Group said the Black Sea ports are operating as usual for now, but it's only a matter of time before the same insurance problems that cut off commercial flights start to hit the shipping industry. Ukraine is one of the world's top grain exporters, loading container ships that carry 12% of the world's wheat supply and 16% of its corn. (AP Photo/Efrem Lukatsky, File)

MCHENRY, Ill. — Grain and fertilizer prices jumped Thursday, hours after Russian troops launched attacks on cities throughout Ukraine and Russian troops invaded the country.

“It’s not just the production issues we are concerned about; it’s obviously about the export situation that certainly is a discussion for corn and wheat and slightly for oilseeds as well,” said Rich Nelson, chief strategist at Allendale Inc., the McHenry-based agricultural market research firm.

“On the corn side, Russia and Ukraine combined will do about 19% of the world corn exports. On the wheat side, they have about 32% of world wheat exports,” Nelson said.

A large share of those exports flow out of Ukraine’s Black Sea ports of Kherson, Mykolaiv and Chornomorsk and the deepwater Black Sea ports of Yuzhniy and Odesa.

After threatening for weeks that he would attack Ukraine, President Vladimir Putin announced on Wednesday that Russian troops were launching military operations against Ukraine. Attacks were reported against military installations and airfields and in major cities throughout Ukraine late Wednesday and early Thursday.

While prices for corn and wheat and soybeans jumped, so did the two major inputs for farmers who will be planting corn and soybean in a few months — fuel and fertilizer.

On Thursday, March 2022 corn closed at $6.95 a bushel, May 2022 wheat closed at $9.32 a bushel and March 2022 soybeans closed at $16.61 a bushel.

Russia is the world’s top exporter of nitrogen fertilizer and the military action prompted the price of fertilizer to jump.

According to Bloomberg’s Green Markets, New Orleans prices for the nitrogen fertilizer urea reached $700 per short ton on Thursday. That was up from just over $550 earlier in the week.

Oil prices also spiked, with Brent crude oil reaching $105.79 before dropping on Thursday. West Texas Intermediate crude oil hovered around $99 a barrel.

“The energy markets reflect uncertainty. They are looking at possible disruptions. It could be temporary disruptions, but it’s enough to cause price increases in those energy markets,” said Mike Doherty, senior economist at Illinois Farm Bureau.

“When you look at the fact that oil was already over $100 a barrel in forward contract trading and where natural gas prices have been and how elevated they are, it does not take very much for those markets to get very nervous.”

Nelson said the ongoing rally in grain prices was boosted by the news from Ukraine and Russia.

“Our two-month-long rally has already been in place due to South American issues, weather issues, along with the inflation argument, along with high energy prices. I would make the argument that this is one more story on top of a lot of other psychological-based stories,” Nelson said.

Jeannine Otto can be reached at 815-410-2258, or Follow her on Twitter at: @AgNews_Otto.

Jeannine Otto

Jeannine Otto

Field Editor