StoneX Expert Talks War, Weather and Wheat in the Black Sea Region
Key takeaways
- Farmers on both sides of the Russia/Ukraine conflict continue to produce
- The weather outlook for the region is a cause for concern
- Global wheat supplies remain steady for now
Matt Ammerman, Vice President-CIS, Black Sea Region for StoneX sat down with the Agriculture of America podcast from the StoneX Ag & Dairy Outlook in Nashville to discuss his outlook for the region, with the backdrop of the hot war between Russia and Ukraine.
Ammerman was asked to give his high-level overview of where things stand in the region, and his answer was overall positive. "Things are operating as normal." War has existed in the area since 2022, when Russian troops invaded Ukraine. Despite the hardships of war, farmers on both sides have continued to forge ahead, and exports have continued to flow from the region. "They've had hardships, of course, but Russia and Ukraine farmers figured it out. They had some issues with exports, but they figured it out," said Ammerman. Impacting the region now more than war is the state of the weather.
Ukraine's wheat crop is grown in winter. The Russian crop is a mixture of winter and spring-grown wheat. The weather in the region this winter has been similar to the conditions in the US: it is dry and warmer than normal. Due to the lack of snow, Russia and Ukraine need moisture to ensure a good crop. Spring rains in April and May could make all the difference in this year's yield.
In comparison to the rest of the world, the Black Sea region's wheat is the least expensive globally. Ammerman said this is due to more significant risks, which reduce the cost of production and, hence, lower prices. Ammerman said that even if there were a disruption in the flow of wheat from the region, other countries like Argentina, Australia, the US, and others in Europe could step in and fill any supply chain gaps. "There's more of a steady supply globally," said Ammerman.
Looking at other commodities across the region, Ammermann explained that Ukraine is more diversified than Russia due to its soil and climate. Instead of keeping all its focus in barley and wheat, Ukraine is planting additional crops, like corn, that produce better yields. With the Middle East and Africa being large buyers of oilseeds, specifically soybeans, Ukraine is figuring out how to grow and offer soybeans at a lower price. Across the region, Ammermann can see into the future. "Jumping way forward, like the next decade, we'll see more advancement on oilseeds," Ammermann said.
Ammermann was asked, from a US farmer's perspective, what he thinks they should be thinking about. "I grew up on a farm, and this is what I tell my brother … when Chicago rallies, it's not just US farmers responding. It's the Black Sea farmer. It's Europe. It's Brazil," Ammermann said. "In today's world, when a rally is there … many, many more people want to sell. That's my quick take."
In his closing remarks, Ammermann said the present situation comes down to politics. The war must end before questions about the region's future can be answered. Until then, it's impossible to know what type of investments will flow into Ukraine and their impact on global agricultural trade.
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Listen to the full interview here.
Writer: Dan Morales
Expert: Matt Ammerman, Vice President-CIS, Black Sea Region for StoneX
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