Stu Ellis: Global Uncertainty Awaits Farmers in 2022

There may not be very many individuals who are sole proprietors who must juggle global economic issues like farmers do every day.

Obtaining a city license, or a county health permit, or filing a state document for a business name are not as overwhelming as some of the decisions made in a farm office daily, and sometimes hourly.

Currently, the global market for grain, which filters down to determine cash prices at local grain elevators is becoming stressed about the new COVID variant, the uncertainty of OPEC and the oil market, and the political intrigue in China that has suddenly and unexplainably hit the soybean market.

Then there is the conundrum about what to do with fertilizer and crop protection chemicals for the 2022 growing season. The family needs to eat, the lender must be paid, along with taxes, college tuition, nursing home care for Grandpa.

The China issue is an enigma, because farmers had watched soybean prices rise with Chinese demand, then suddenly China quit buying at the time it usually ramps up its purchases from the United States.

No one has been able to put their finger on what turned that market down, other than some internal political issue or a potential renewal of African Swine fever that decimate the Chinese hog herd.

OPEC has curtailed its production to boost global oil prices. While that hits all motorists, it has a significant expense for farmers who buy thousands of gallons per year.

The higher oil price allowed higher prices for ethanol, and that has helped corn prices, but there is no certainty how long those dynamics will remain.

As farmers try to calculate their fertilizer needs for the spring, their suppliers are declining to quote any prices, and most are not wanting to guarantee any delivery until they have it in their warehouse next spring.

That results from lower natural gas supplies in Europe, needed to make nitrogen. It also results from the growing conflict between Russia and the Ukraine, where a third of the world’s potash fertilizer originates.

If fighting were to break out, farmers could not count on any access to potash, needed for crop nutrition and yield.

If someone is not sure how much of a crop he might produce in the next growing season, they might look back on history, and plan for expenses and prices based on the past few years. However, recent history does not have any parallel to the current dynamics in the farm economy.

With China holding nearly all the cards on farm crop protection chemicals, since that is where active ingredients are manufactured, there is no certainty when those might be delivered from plants that are currently closed due to COVID.

All of the weeds that will grow in corn and soybean fields next year are practicing their “high fives.”

Meanwhile, farmers who will be going to the barbershop for their holiday haircut in the next couple weeks might be asked by the barber, where all of their hair went.

Stu Ellis is a Decatur, IL-based agricultural communicator.