Russia Agrees to Extend Black Sea Grain Deal

Last Week’s Moves

Corn 632-6  (-0.16%)  |  Soybeans 1487-0 (+0.68%)  |  SRW Wheat 699-4 (-1.58%)

KC Wheat 828-2 (-0.87%)  |  Live Cattle 156.025 (-0.24%)  |  Lean Hogs 92.300 -(1.10%)

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Welcome to your weekly agriculture report, where we cover everything you’ll need to know for the week ahead. This week, Russia agrees to extend the Ukraine grain deal, fertilizer prices continue to fall, and the USDA received more than 350 applications for a new grant program.

Russia Agrees to Extend the Ukraine Grain Deal 

On Saturday, a deal that permits the secure export of Ukrainian grain from the Black Sea was renewed for at least 60 days, which is only half of the originally intended period. 

• Continuation can’t be confirmed… The United Nations and Turkish President Recep Tayyip Erdogan announced the extension, but neither confirmed how long it would last.  In a statement, Russia's foreign ministry said Moscow had decided to limit the extension of the deal to 60 days over what it called "a lack of progress... on normalization of domestic agricultural exports".  The U.N., Turkey, and Ukraine had pushed for 120 days
• Grain guarantee… Russia’s President Vladimir Putin vowed to continue supplying African countries with grain if Moscow exited the agreement.
• Corn cargo… Ukraine and Russia are significant contributors to the global supply of affordable food products such as wheat, barley, and sunflower oil, which are relied upon by developing nations. On Saturday, two vessels departed from Ukrainian ports carrying over 96,000 metric tons of corn, with China and Tunisia as their destinations, as per U.N. records.

Fertiliser Prices Continue to Decline

Last year, fertilizer prices climbed higher due to several supply-side issues, including high natural gas prices, export restrictions in China, and the Ukraine conflict.  In 2023, Fertiliser prices began to fall and are now at pre-Ukraine war levels

• Conflict caused corn cuts… During the 2022 growing season, when fertilizer affordability plunged to a multi-year low, US farmers reduced corn planted acreage by 5% from the previous year
• Prices pare production… Reduced fertilizer usage in 2022 — due to low affordability and supply disruptions — impacted food production around the world.  For corn farmers, fertilizer and other input costs are projected to account for 49% of total operating costs for corn farmers in 2023. 
• Stability not secured... While there is increased stability in the fertilizer markets any further disruptions within the market, from escalating global tensions to supply chain disruptions, could lead to fertilizer price increases. 

Earlier this month, the U.S. Department of Agriculture announced that they will make available $250 million through a new grant program this summer to support independent, innovative, and sustainable American fertilizer production to supply American farmers.

• The abundance of applicants… The USDA has received more than 350 applications from independent businesses from 47 states and 2 territories for the first two rounds of a new grant program to add innovative domestic fertilizer production capacity.
• No time to lose… The first $29 million in grant offers under the first round focus on projects that can come online in the near term.  

What else you need to know… 

• Focus on foreign ownership... Policy experts outside Congress believe national restriction on foreign ownership could get passed this session; they also believe there could be challenges in its rollout
• Various vaccines…Several top manufacturers of flu vaccines have stated that they are capable of producing hundreds of millions of shots for humans against bird flu in just a few months in the event that a new strain of avian influenza crosses over to humans.
• Farm Bill funding…The Animal and Plant Health Inspection Service (APHIS) of the U.S. Department of Agriculture (USDA) will provide $15.8 million in funding to 60 projects, led by 38 states, land-grant universities, and industry organizations. These projects aim to strengthen the country's capability to promptly manage and curb animal disease outbreaks. 
• Weather woes… According to the National Oceanic and Atmospheric Administration (NOAA), 2022 has become the third most expensive disaster year on record, surpassing 2021. The total economic losses are estimated at around $165 billion, which puts it behind only 2017's $346 billion and 2005's $244 billion.

That’s all we have for you this week, do you have anything for us? We’d love to hear from you with stories or recommendations for new sections to include! Drop us a line at news@barchart.com with any feedback or input.

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