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Last week, National Pork Board hosted a Checkoff-funded webinar – The Ukraine-Russia War and the Meat Livestock Value Chain – to provide pork producers with an analysis of the current situation. Panelists included: Rupert Claxton, Gira; Joe Kerns, Partners for Production Agriculture; and Dr. Steve Meyer, Partners for Production Agriculture.
Rupert Claxton shared the global economic impact of the Ukraine-Russia War on energy, fertilizer, feed and the livestock markets. Russia accounts for 13% of globally traded fertilizer value, producing 23% of ammonia, 21% of potash, and 14% of urea. Since fertilizer prices are rising and the margins are tight, farmers are likely to buy less or conserve the fertilizer they already have, meaning potentially lower yields globally, reduced exports and higher grain prices.
Both Russia and Ukraine are massive producers and exporters of oilseeds and grain, specifically wheat. Prices were already increasing prior to the invasion due to weather events, supply chain disruptions and input costs, but the trade limitations and tapering production add additional challenges.
Planting season is approaching, but prime regions of corn and wheat production in Ukraine are occupied by the Russian army. Additionally, the skyrocketing input cost, low liquidity, wartime obligations, labor and supply chain disruptions all factor in a low outlook in yield. Finally, the winter wheat will need to be harvested in July or August, so time will tell if it can be harvested.
Rupert Claxton, from Gira, says to take a step back and look at long-range data to keep prices in perspective. “We can learn from what we’ve seen before.”
Overall, Claxton explained the immediate impact of the war centers more on higher feed costs compared to meat. Chicken is Ukraine’s primary protein commodity, and production has plummeted due to energy cuts, supply chain disruptions and labor shortages.
Claxton isn’t concerned about the direct impact of meat supply globally since other countries can backfill the need with Ukraine’s approximately 500,000 tons of lost protein, mostly chicken, halted in the export market. This is coupled with global consumption declining as inflation and higher gas prices squeeze disposable income.
As the big rock of the conflict overseas hits the small pond of U.S. agriculture, Joe Kerns explained that producers can manage their risk domestically and gave a reality check for the price of hogs during these volatile times.
Joe Kerns, Partners for Production Agriculture, said in times of uncertainty, people pull back on trade, but it’s important to put it into perspective. Kerns shared how assumptions for hog production are significantly positive, regardless of the negative impact of weather events, increased feed cost and trade dilemmas.
Watch the full recording:
April 4, 2022 - Pork Checkoff
