It has been a slow start here in southwestern Ontario to planting season.  The same could be said for large parts of the United States, which until now have been inundated with cooler and wetter weather.  Your loyal scribe is ready to go, but of course I’m waiting along with everybody else. I’ve seen about everything you can think of over the last 40 years in the fields, so here we go again.

On the other hand, that might not be the truth. Even though I have written this column for over 35 years I don’t think the events of 2022 are like anything that I have seen before.  It is telling when I hear from other farmers who lament about contracting new crop grain at what they deemed too low of prices for 2022.  As you all know, my standard answer is I never know what grain prices will do but I do know that 2022 is an incredibly unique grain pricing environment.  When you have a shortage of grain meet a major geopolitical event such as the war in Ukraine you get reality and prices you never ever thought possible before.

I’ll say it again. As farmers, we are at a very unique time in our lives. That goes for you who are 35 years old or over 60 like myself. We have seen an increase in global food prices of over 20% in the last year.  We got here because we’ve had a series of weather events over the last few years that have shortened our supply. That resulted in much higher prices, but when the guns started firing over Ukraine on February the 24th this agricultural world convulsed like never before.

What is the truth?  The answer to that question is blowing in the wind especially with the war going on.  What we do know is that the Black Sea region exports about 30% of global wheat exports.  Of course, we also know that the Ukraine produces quite a bit of exportable corn as well as sunflowers and other oilseeds.  Seeing Ukrainian farmers last week dawn flak jackets and bulletproof vests, driving their tractors through fields which have been swept for mines gives you pause.  Knowing the future with regard to agricultural output in this environment is definitely a flyer and increasingly our grain markets are digging deeper into that reality.

A few weeks ago I wrote a column where I said this grain market wants more of everything and that has turned out to be right so far. Crushing soybeans is good because soybean meal and soybean oil are priced so high. Doing the same thing for a bushel of corn for ethanol is about in the same category.  Just look at wheat futures on some unexpected Tuesday and they will go up for no reason. Of course, the question is, what happens next?

I wish I knew. It is interesting, I have had two standing pricing orders for new crop grain hit this spring which only a year or two ago I could have never imagined. Previous to this time, those high prices were just fantasy. However, at the same time I did not face nitrogen prices over 100% higher than they were last year and general farm inflation which has been significant.  Collectively in the next few weeks farmers across North America will throw all of this inflated investment into the ground hoping something will grow. It’s like uber risk this time around.  I would hope at the end of the day it will not become a case of most of us just shuttling money around. We need real profits to be made at this uncertain time.

What do you think the future will be in 2022 and 2023? Do you think it will be more of the same especially if the war is extended through several years? I’m sure nobody is hoping for that and of course we’re not hoping for an expanded version of the war we have going on now.  As it is, large parts of the developing world will likely face food shortages this year or at least food inflation that is unsustainable.  Countries in North Africa have a very high per capita consumption of wheat and their supply is at risk. Ditto for many other African countries as well as countries in Asia.  So much this year depends on 4 inches of soil, good sunlight and good moisture to make these crops grow.

The antithesis of that is a poor crop in the northern hemisphere this year. We’ve all been there individually. I can remember planting corn about this time of year and it never ever did rain on that field. Unbelievably, I harvested 93 bushels per acre, less than half of what I expect now. Do the farm input math on 93 bushels per acre and it is not pretty. Do the math on a subpar crop in the northern hemisphere this year and grain prices just go so much higher. Spike increases might become agricultural price benchmarks for the future.

In the next few weeks there certainly will be challenges, maybe even a hydraulic line exploding or a corn planting monitor screeching. I’ve been there before.  Our first job as producers is to get this crop planted and keep in the game.  In 2022, the world wants this crop like never before.  The weather has been fickle so far, but at the end of the day we need the weather to play nice this year.  The way the geopolitics are going anything less will just make it so much more difficult.