Russia’s Invasion of Ukraine: Implications for Agricultural Trade and Production

Russia’s Invasion of Ukraine: Implications for Agricultural Trade and Production

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INSIGHTi

Russia’s Invasion of Ukraine: Implications for
Agricultural Trade and Production
March 17, 2022
On February 24, 2022, Russia initiated a widespread invasion of Ukrainian territory, including Russian
attacks from forces deployed in Belarus. In response to the invasion, the United States and other countries
imposed financial and trade sanctions on Russia and Belarus. The combined impacts of the invasion and
sanctions have disrupted commercial air, rail, and ocean shipping from Ukraine and Russia and have
impacted international trade patterns, including for certain agricultural commodities and fertilizers.
For more on U.S. and allied responses to Russia’s invasion, see CRS Insight IN11869, Russia’s Invasion
of Ukraine: Overview of U.S. and International Sanctions and Other Responses and CRS Insight
IN11871, Russia’s Invasion of Ukraine: New Financial and Trade Sanctions.
Ukraine, Russia, and Belarus Are Major Exporters of
Certain Agricultural Commodities and Fertilizers
Ukraine and Russia are major global exporters of wheat, corn, barley, sunflower seed oil, and rapeseed oil
(Figure 1). These commodities are used to produce food, animal feed, biofuels, and other industrial
products. Many countries purchase Ukrainian and Russian wheat and barley, including Egypt and Turkey.
Major importers of Ukrainian corn exports include the European Union (EU) and China, among other
countries. India, China, and the EU are major importers of Ukrainian sunflower seed oil.
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Figure 1. Ukrainian, Russian, and U.S. Exports for Selected Agricultural Commodities
for the 2021-2022 marketing year

Source: CRS using data from U.S. Department of Agriculture (USDA), Foreign Agricultural Service, Grain: World Markets
and Trade, updated March 2022; and Oilseeds: World Markets and Trade, updated March 2022.
Notes: The 2021-2022 marketing year is crop-specific and covers the 12-month period starting at harvest time. Typically,
the United States is not a major exporter of barley, sunflower seed oil, or rapeseed oil.
Farmers in most countries apply a mixture of fertilizers rich in nitrogen, potassium, and phosphorus to
increase crop yields. Russia and Belarus are the second- and third-largest producers of potash—the main
ingredient in potassium-rich fertilizers. Russia also is a major producer and exporter of nitrogen fertilizers
and phosphates. Many countries purchase fertilizer exports and raw materials for fertilizer production
from Russia and Belarus, including Brazil, India, and the EU.
Initial Impacts on International Markets and Trade
Daily U.S. wheat futures prices in early 2022 generally were higher than they had been for most of 2019-
2021 for a variety of reasons, including drought in the United States and Canada, increased demand from
China and other countries, the continuing impacts of the Coronavirus Disease 2019 (COVID-19)
pandemic, and other factors (Figure 2). These factors similarly affected daily futures prices for corn.
After the Russian invasion, wheat prices increased to record high levels and corn prices increased.

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Figure 2. Daily Closing Prices for U.S. Corn and Wheat Futures Contracts

Source: CRS using data from Nasdaq.com, downloaded on March 14, 2022.
Note: Prices are for wheat and corn futures contracts traded on the Chicago Board of Trade and not adjusted for
inflation.
Much of the planned wheat and corn exports from Ukraine and Russia for the 2021-2022 marketing year
had been exported prior to the invasion. The war has diminished exports through the Black Sea, the major
shipping route for Ukrainian and Russian grains, although Russia maintains grain exports through the
Caspian Sea. The majority of Ukrainian rapeseed and rapeseed oil exports for the 2021-2022 marketing
year had been exported prior to the invasion, however exports of sunflower seed and related products
have been impacted by port and processing facility closures.
In its March 2022 forecast issued after the Russian invasion, USDA projected that global use of wheat,
corn, and oilseeds will increase, and end-of-year carryover stocks will decrease relative to prior marketing
year levels. As a result, global stocks-to-use ratios will decline for the 2021-2022 marketing year relative
to prior marketing year levels (Table 1). Market prices tend to increase as stocks-to-use ratios decrease.
USDA projected that Australia and India will expand wheat exports, the United States and India will
expand corn exports, and Australia and Canada will expand barley exports. USDA also projected that
some importers of sunflower seeds and oils may offset reduced supply of these commodities with
additional purchases of other oil seeds.
Table 1. Global Stocks-to-Use Ratios for Wheat, Corn, and Oilseeds
by marketing year
Stocks-to-Use Ratio
Stocks-to-Use Ratio
Stocks-to-Use Ratio
Commodity
2019-2020
2020-2021
2021-2022
Wheat
38%
37%
36%
Corn
27%
26%
25%
Oilseeds
22%
23%
20%
Source: CRS calculations using data from USDA World Agricultural Supply and Demand Estimates, WASDE-622, March
9, 2022.
Notes: Values for the 2020-2021 marketing year are USDA estimates, and values for the 2021-2022 marketing year are
USDA projections. Stocks-to-use ratios are the ratio of end-of-year carryover stocks to annual consumption for all uses

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(e.g., food, animal feed, biofuels, and industrial uses). The stocks-to-use ratio measures the proportion of surplus
commodity available relative to total annual use.
Implications for 2022 Commodity Production
New production of grains and oilseeds in 2022 will depend on planted acres and realized yields. Many
countries grow wheat, corn, and oilseeds. Annual planting times vary depending on the hemisphere, crop,
and weather. Winter wheat varietals are planted in the fall and harvested late spring/early summer. Spring
wheat are planted in the spring and harvested in late summer. Plantings for 2022 winter wheat are
complete for certain countries, including the United States and Ukraine. Plantings for 2022 spring wheat,
corn, oilseeds, and other spring crops may begin as early as next month in the Northern Hemisphere.
Farmers generally choose which crops to plant based on expected profitability. Historically, farmers have
responded to high commodity prices by planting more acres of that commodity. Certain structural factors
can limit farmers’ abilities to switch between crops. For example, farms that specialize in growing corn
and soybeans may not have the necessary equipment for planting wheat and barley. Crops may require
different types of fertilizers to achieve optimal yields. Farmers may respond to high fertilizer prices by
planting fewer total acres, adjusting the mix of crops planted, reducing fertilizer applications, and/or
adjusting other farm practices.

Author Information

Stephanie Rosch

Analyst in Agricultural Policy

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
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