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Global conflicts could raise fuel costs again, boost wheat market volatility

An ag economist with University of Missouri Extension says renewed tensions in the Black Sea region, and the continued Middle East conflict mean higher production costs and more market uncertainty.

The global energy market is getting tighter as Ukraine strikes oil refineries and ships exporting Russian oil.

Ben Brown tells Brownfield the U.S. crude oil futures have responded with a 10 percent increase, and at the retail level “we haven’t seen the price increase yet. I even looked this morning when I went by my local gas station on my way into work, and it was still priced the same as what it was yesterday afternoon. But I do anticipate that it will increase here either this afternoon or tomorrow. I was a little surprised it hadn’t increased our rate already.”

He says the higher fuel costs took many U.S. farmers by surprise this spring, and many will try to protect themselves heading into fall.

“If you can get a bid, I think some producers are going to be interested in in in offsetting some risk, but that’s the first step in the equation.”

Brown says U.S. grain prices have been benefitting as some of Russia’s grain exports are being hit by Ukraine.

“It would be wheat that the U.S. is most interested in. They export other products, too. But we could see some substantial increases in wheat, especially if it’s coupled by a spring wheat crop here in the U.S. that starts to really suffer under weather conditions.”

The U.S. and Middle East continue to fight, with the Strait of Hormuz still not fully operational, which also impacts crude oil prices.