Russia-Ukraine War Reverberations on Australian Grains
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Ongoing Russia-Ukraine War Reverberations on Australian Grains



Though half a world away, reverberations from the Russia-Ukraine war are affecting all manner of decisions on Australian grain farms. 

From crop nutrition to grain marketing, plans have been pushed into unfamiliar territory. Disruptions to the trade of Russia and Ukraine, two major agricultural powerhouses, have resulted in significant price increases for grains and for inputs like fertilisers and energy. 

Here we take a look at expectations for grains, fertilisers, energy and logistics over the coming year. 


Grain supply globally has been heavily disrupted with Ukrainian grain crop production and exports already severely reduced in the upcoming 2022/23 season. Russia has continued to export grain and will continue exporting to the world market as importers need volumes to ensure food security. Even so, global grain prices can be expected to remain elevated throughout 2022 and beyond. Australian prices have not increased as much as our EU and North American competitors due to our two consecutive years of near record production. With expectations that we are on track for another bumper season, local prices are likely to remain trading at sizeable discounts to global values in 2022/23.  

Fertilisers are another key product exported from the Black Sea region, and elevated prices for these will cut into farmer margins. The pressure on fertiliser prices is not just from short supplies, but also from high freight costs, strong demand and high energy costs feeding into higher costs of fertiliser production. Countries reliant on imports, like Australia, have to plan for continued elevated prices and, potentially, some supply shortages in 2022/23.  

Energy cost increases resulting from the war add to costs in farming and the supply chain through higher crude oil, diesel and gas prices. With Europe likely to ban Russian oil imports by late 2022, and with Russia preparing legislation to disrupt commodity exports to countries that impose sanctions or supply Ukraine with weapons, we expect energy prices to stay volatile and high. While oil prices above USD 100/bbl already feel expensive, a further >50% price upside is possible as a consequence of those sanctions. Australia’s grain supply chain would feel the knock-on effect from global price volatility.

Logistics already stressed by COVID, now face additional pressures from the war. Shipping costs will continue to feel the rise in energy prices. Container freight rates are significantly elevated and it will likely take two or more years to unwind congestion around the world and for freight rates to move closer to historical levels. Any farm inputs imported to Australia in containers, including agri-chemicals, will as a result be priced to accommodate higher freight costs and be prone to supply disruptions. The same applies to containerised grain exports. Meanwhile, high costs of fuel and truck part shortages locally will continue to put pressure on domestic freight costs for the Australian grains supply chain.

A quick end to the war, as much as we may wish for it, seems unlikely. 

But as we have seen, prices react sharply and abruptly in the absence of Ukraine, and they will probably do the same on its return, and even a partial resolution of the conflict would likely put downward pressure on markets, including grain. 

Unwinding sanctions on Russia and Belarus however might take longer, and the pressure on oil, gas, and fertiliser prices may not abate as quickly and strongly as farmers hope. A lopsided unwinding such as this, means margin pressure in 2023/24 could be even stronger. 

With this in mind, we see an ongoing case for closer attention to input use, margin management and forward planning, beyond 2022/23 and into 2023/24.


Disclaimer: This article has been prepared for general informational purposes only. The statements published within this article are reasonably held based on the information available at the time of publication.


How are grain farmers managing high input costs?

  1. less up front fertiliser, with plans for in season application if the season remains favourable
  2. lower application rates and more conservative yield ambitions
  3. detailed soil testing to allow more efficient input applications
  4. hiring contractors for variable rate application
  5. using soil reserves of potassium and phosphorous
  6. switching towards more pulses
  7. switching to natural/organic alternatives to traditional fertilisers
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