Pro Farmer ag event of the year: Russia invades Ukraine. The event of the year was a no-brainer. Russia’s invasion of Ukraine on Feb. 24 shocked the world, prompting Pro Farmer’s lead headline in the Feb. 26 issue: “Russia invades Ukraine... Europe’s ‘darkest hours since WWII.”
The war closed Ukraine’s ports on the Black and Azov seas, triggering an explosive rally in grain and soy markets amid disruptions to global trade flows. Front-month corn futures surged to $8.27 — only 16 3/4¢ below the all-time high posted in 2012. Front-month soybeans hit $17.84, just 10 3/4¢ shy of the market’s all-time high. Front-month SRW wheat futures surged to a new high of $14.25 1/4.
Combined, Ukraine and Russia account for nearly 30% of global wheat exports and almost one-fifth of world corn exports. Ukraine is also the world’s largest producer of sunflower seeds and sunflower oil. Combined with Russia, the two countries account for nearly 80% of global sunseed oil exports. They also account for nearly one-third of the world’s barley exports.
Energy prices also spiked higher since Russia is a major producer and exporter of oil, natural gas and fertilizers. Front-month crude oil rallied to $130.50, the second highest ever behind the 2008 surge to $147.27. Natural gas prices jumped to $10.028, though that was only the fifth highest price and well below the record $15.780 in 2005. Diesel and fertilizer prices also spiked.
Prices have dropped sharply from those levels and Ukrainian grain started flowing via Black Sea ports in August, but the war continues and global impacts from Russia’s invasion are still being felt as Western sanctions remain intact.
Pro Farmer ag persons of the year: Guterres, Erdoğan. After extended negotiations, a 120-day deal to resume Ukraine’s grain exports via three Black Sea ports was signed in late July and shipments started by early August. A parallel deal allowed the resumption of Russian grain and fertilizer exports. Shipments were allowed via a “humanitarian corridor,” with all incoming and outgoing vessels inspected at Istanbul, Turkey, by representatives from Ukraine, Russia, Turkey and the United Nations. The grain export deal was extended for another 120 days on Nov. 18, without changes, though UN officials committed to freeing up more shipments of Russian grain and fertilizers.
Ag exports from the two countries aren’t back to their pre-war levels, but concerns with global trade flows have eased.
Many officials helped negotiate the deal to resume Black Sea grain and fertilizer exports, but UN Secretary-General António Guterres and Turkish President Recep Tayyip Erdoğan were the ones that brought Russia and Ukraine to the negotiating table — twice — and got the deals signed. For their efforts, Pro Farmer recognizes Guterres and Erdoğan as the ag persons of 2022.
Pro Farmer ag story of the year: Fight against inflation. Inflation surged to the highest levels in more than 40 years in the U.S. and other countries in 2022. Russia’s invasion of Ukraine, China’s Covid-19 lockdowns, major transportation disruptions and other logistics struggles all contributed to the decade’s-high prices.
The Fed and other central banks around the world aggressively raised interest rates to combat surging inflation. As 2022 comes to a close, there are signs inflation has peaked and central banks have slowed their rate of increase to interest rates... but the battle will continue well into 2023.
The question will be whether the Fed and other central banks can get inflation under control and negotiate a soft landing. Inflation will remain a threat to consumers and the economy in 2023.
Honorable mentions for ag story, event and person. Farmers: Producers around the world continued to deal with huge price volatility, adverse weather, inputs supply and price constraints and lingering Covid impacts.
Crop insurance agents: They are not only a farmer’s No. 1 financial advisor on crop and livestock insurance but also advise on FSA programs. Agents helped with farm bill choices, MFP, Covid aid and disaster assistance.
La Niña: It caused adverse weather in North America, South America and Australia for a second straight year.
Vladimir Putin: The man behind our event of the year — even though his impact was extremely negative.
Jon Doggett: CEO of National Corn Growers Association gets a “lifetime achievement” award for 20-plus years of service. He influenced five farm bills, two versions of the RFS and this year publicly pushed for year-round E15.