The market volatility and potential disruptions in exports in supply of commodities such as wheat and corn are adding more strain to farmers who are bearing costs from ongoing supply chain snarls.
Russia and Ukraine account for around 29% of global wheat exports, 19% of global corn supplies, and 80% of the world’s sunflower oil exports. This reliance has many traders worried that any further military force could trigger a massive scramble by food importers to replace supplies normally sourced from the Black Sea region. Wheat futures reached record highs on Tuesday, following a 14-year high at the end of last week.
"While U.S. wheat prices rose, farmers have also been experiencing a price increase for key inputs – not only related to this conflict – but from the existing stresses that have been impacting the entire supply chain for some time," CEO of the National Association of Wheat Growers, Chandler Goule, told FOX Business.
Prices for fertilizer are already up as much as 98% from a year ago. Two of the key fertilizer forms, including nitrogen-based Urea and the world’s most widely used phosphorus fertilizer, diammonium phosphate, are up nearly 99% and 68% year-over-year respectively, according to data from DOW Jones. Threats to supply cuts and spiking prices have some farmers concerned about hoarding. "We're paying more for parts," Ryck Suydam, owner of Suydam Farms told FOX Business.
Suydam Farms grows produce, plants and livestock, but its main source of income is hay production and field crops. Sudyam said that to stay in business, they will have to pass the costs down to the consumer. At the beginning of this year, Suydam raised the prices on his hay by a dollar per bale, and prices will likely increase 25 to 30% over this year to cover the increased costs. "My fear is that we’re gonna probably lose money this year," Suydam said.