Blog: long shadow on markets from war in Ukraine

The reliance on Ukraine and Russia for wheat, fertiliser and gas will have long lasting impacts on global food supply chains – not to mention consumer prices for food and fuel.

Farmers have already been faced with rising input costs, particularly for fertiliser and energy, linked to the surge in wholesale gas prices last autumn.

Gas prices continue to rise, as energy markets react to the risk of interruption to Russian energy supplies.  Markets are expected to remain bullish in the short and medium term, keeping pressure on costs.

The global availability of grain is another rising issue, which is likely to drive further increases to already high food and feed prices.  The absence of supplies coming out of Russia and Ukraine will have the most direct impact, as they typically account for 29% of global export volumes.

High fertiliser prices, driven even higher by the Russian export ban and inability to source Ukrainian supplies, may lead to lower yields, further hampering grain supplies. The longer-term impacts are not yet unclear, but against a background of already tight global wheat stocks, and a market looking towards production growth to balance demand, the price direction can only go one way.

Impact in the UK

With spring fieldwork starting, the rising cost of fuel will be felt in growers’ margins. Fertiliser rates will also need to be considered. While many arable farmers are already covered for their fertiliser requirements this season, there will be questions around how much of the fertiliser should be carried over to next season instead, to buffer from some of the market volatility.

UK feed wheat (May-22) prices are hitting record levels and new crop (Nov-22) values are at contract highs. This is going to be felt in feed prices for livestock producers, putting more pressure on already stretched margins. Decisions around fertiliser use will also be important in balancing feed requirements from forage and purchased feeds.

The biggest challenge facing all farmers and growers for the foreseeable future will be adapting to these higher costs and dealing with the volatility in both input and output prices.

A dedicated page has been created where you can find all the latest analysis and insight from our industry experts, along with links to the most relevant AHDB tools and resources to help navigate these challenges

Market impacts of the Ukraine conflict