AMES, Iowa – Upheaval in Ukraine could result in a dip in global supplies of corn and soybeans and roil grain markets across the globe, according to an Iowa State University economist.
Ukrainian farmers have ramped up their production of corn and soybeans in recent years, most of which is exported. But recent tensions with Russia, focused in the Crimea region and the Black Sea, could create a bottleneck that shuts down Ukrainian exports to the rest of the world.
The Black Sea is the main avenue by which Ukrainian crops reach international markets. If shipping traffic on the Black Sea is shut down for an extended period, Ukrainian grain will have nowhere to go, said Chad Hart, an Iowa State University associate professor of economics and an ISU Extension and Outreach grain markets specialist.
With less global supply, commodity prices could rise, Hart said.
“If Ukraine continues to have problems, it pulls supply out of the world market,” he said. “That tends to mean higher prices for the commodities because you have less to trade.”
That scenario has already started to play out for the price of soybeans, which has climbed in recent weeks due to the situation in Ukraine as well as continued demand in China and harvesting delays in South America, Hart said.
Even as Iowa farmers gear up for planting in the spring, many are keeping an eye on Ukraine. If the current crisis stretches on without a resolution, Iowa growers could step in to fill the void left by a slowdown in Ukrainian exports.
“Ukraine is definitely on the radar screens of Iowa farmers,” Hart said. “Traveling around the state, we talk about it. The bigger issue for Iowa is planning for planting season, but they’re watching Ukraine to see when they want to sell the crop they have in storage now."
