Rod Curtis thought he was getting a good deal.
The owner of Cache Commodities feed mill in Ogden sold his future feed contracts late last month "thinking wheat and corn were going to be going down in prices."
A few days later, Russian forces swarmed the Crimean Peninsula in Ukraine — one of the world’s leading exporters of corn and wheat.
"As soon as Ukraine and Russia started butting heads the prices went up and we lost money," Curtis said.
Curtis is one of many agriculturalists reeling in the wake of the high-tension standoff, which has sent grain prices soaring over the past two weeks.
"The big picture is that if there is uncertainty in the market, buyers start looking elsewhere for grains. This causes the market to shift," said DeeVon Bailey, an agriculture economics professor at Utah State University in Logan. "Buyers have consumers to provide for and if the market threatens to dry up they have to find a different source."
The Russian military invaded Ukraine early this month following the ouster of Ukrainian President Viktor Yanukovych, who had moved to solidify relationships with Moscow before being overthrown. The Crimean people vote Sunday on whether to break away from Ukraine to become part of Russia.
It’s not just Ukrainian grain that traders are concerned about. Russia also produces a significant share of the world’s wheat and corn — and international sanctions in response to its Crimean incursion could impact global trade.
"Ukraine could stop exporting because of the threat of Russian military," Bailey said. "The Black Sea that they share and the ports that the grains are shipped out of could all come to a halt."
So far none of this has happened, Bailey noted. "Exports between Russia and Ukraine are being made smoothly still," he said.
If prices continue to rise, though, the impact won’t just be felt by those dealing grain.
"If Ukraine stops exporting grains we will start exporting to make up for their lost market," said Shane Symons, a cattle feeder in Mitchell, Neb. "The demand for grains goes up and prices skyrocket, making it more expensive to feed cattle — therefore making cattle worth less and ranchers broke."
Grain and beef aren’t the only only commodities to contend with.
The Unites States is working to speed up the exporting the abundant supply of natural gas in the United States as a weapon to undercut the influence of Russian President Vladimir Putin over Europe, which receives a significant share of its energy needs from Russian gas running through a pipeline that cuts across Ukraine.
The United States does not yet export its natural gas, but the Energy Department has begun to issue permits to American companies to export natural gas starting in 2015.
"If Russia continues its stance in Ukraine this could crush all markets," said Robert Nalbandov, a political science professor at USU. "Russia provides over a fourth of oil to Europe. Russia’s stock has already dropped 10 percent in one day. If tension is dragged out for much longer we could see a drastic outcome for markets globally."
It all could mean a death sentence for Curtis’ feed mill.
"If gas prices rise the cost to ship the feed will be outrageous," Curtis said. "My customers won’t be able to pay their bills and I’ll end up with a half million dollar tab at my feet."
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