If it wasn’t for COVID your loyal scribe would be off to some far-off land. a couple of years ago just before the world ended, I found myself lecturing at East West University in Dhaka Bangladesh. Some people get a kick out of buying a new truck or getting 70 bushel per acre soybeans, I like to go to the end of the earth and see how the wind blows. Hopefully this pandemic will end someday.

One place that I have never been is eastern Ukraine where a massive amount of Russian military equipment is being assembled near the border. If you read my commentary over the last few weeks, you will know that the geopolitical problems between Russia and the Ukraine have been instrumental in some of the price movement we have seen in grains over the last few weeks. In recent days the military equipment is getting even more concentrated, much more concentrated that you need for a simple drill in the middle of January. Wheat futures and corn futures have been volatile partly because of this.

Rewind 21 years ago to your loyal scribe hurtling across Asia in an aluminum tube on the way to Bangladesh. I remember very clearly looking at the rudimentary computer screen on the Singapore Airlines plane and seeing the town of Grozny Chechnya on the screen. I came to the terrible realization that we were going to fly right over it and I was hoping no missiles would come up from the ground. That’s about how close I’ve ever come to Ukraine, but of course that terrible realization did come true several years later when Malaysian air flight 17 was shot out of the sky over eastern Ukraine. It’s a very volatile part of the world.

The events of the last few weeks would certainly make me nervous doing that again. A couple years ago I flew over Iran just a week after Iran shot down Ukraine International Airlines flight 752. Geopolitical tensions are what they are and they make me nervous. However, it is one thing to make me nervous and it’s another thing to make our grain markets nervous. We all know a full-scale war between Russia and whoever decides to side with Ukraine would be electrifying for grain prices and a huge negative for the greater global economy.

If you look at a map of Ukraine and Russia you get a better appreciation for what is at stake. A bit of history is in order as Ukraine was part of the Soviet Union and got its independence after that broke apart in 1991 . Crimea was part of Russia in Soviet Union times, but it was gifted back to the Ukraine by Stalin. In 2014 it was taken back by Russia. The West yawned. Now, with the Ukraine wanting NATO membership and with Canadian troops on the ground in Ukraine it could get messy again.

Ukraine has some of the best farmland in the world and is the leading exporter of corn into China. Of course, that’s not the only thing they grow in the Ukraine, Its ports are busy on the Black Sea and the sea of Asov getting the grain out. Of course, there is also a lot of Russian wheat that leaves through the same area to the east of there. With both countries eyeing each other you would think that that would be a flashpoint for conflict. in any case, that’s part of what makes the grain markets nervous.

Of course, I’m wishing for peace in a neighborhood which historically hasn’t been peaceful. There are lots of Russian speaking people in the Ukraine and the same could be said for Ukrainian speaking people in Russia. Look back on the history and you will find much integration, but also a lot of problems. See Stalin.

A year ago, I was asked to speak in a virtual event in Kiev Ukraine on my thoughts on world grain markets specifically corn and soybeans and wheat prices. For anybody my age learning more about Black Sea grain markets is a real flyer. I’m of the generation where the Soviet Union was king at one time and a food importer. It’s been a real mindbender over the last 30 years to see the same countries begin to be major exporters of grain on the world market. It was a privilege to speak to the Ukrainian group and I hope to do it again someday in a peaceful world.

Let’s hope that happens. December corn is $5.62 today a bushel and November soybeans are $13.20 a bushel. I won’t even mention old crop which is higher. Let’s call that for the moment, the Russia Ukraine risk premium. In 2022, geopolitics matters to grain prices. It’s never been a secret, it’s just that tension is rising, and we don’t want it to reach a crescendo.