Ag economist watching extraordinary volatility in wheat market
In just over a week, Chicago wheat markets have moved sharply higher following Russia’s invasion of Ukraine and the May contract is locked limit up again today.
University of Illinois Ag Economist Scott Irwin tells Brownfield he thinks this will be the biggest supply shock to the global grain market in his lifetime.
“This reflects the reality of trying to grasp exactly how big of a hole this war could put into global food and feed grain supplies, and it is very clear that the markets are voting that this is a massive shock.”
Irwin says long term implications will depend on how long the war goes, its severity, the exact nature of sanctions applied to Russia and how those impact wheat exports, but for now he doesn’t see this conflict being resolved very quickly.
“But just recognize that if somehow a cease fire is called, then these price gains can be reversed extremely quickly because they are due to a perception that the war is going to continue for quite some time and disrupt production in the black sea region.”
He says sellers should start taking advantage of these exceptional grain prices in case they do fall back down quickly.