CHICAGO, ILLINOIS, US — Drought, skyrocketing fertilizer prices and the war in Ukraine are three factors set to play a key role in potential global crop production disruption.

Gregory A. Morris, president of Agricultural Services and Oilseeds at ADM, said the market has its hands full trying to “figure all that out.”

In a March 3 presentation at the Bank of America Agriculture and Materials virtual conference, Morris discussed the potential disruptions and ADM’s ability to weather the challenges.

“We came into this year with high expectations in the South American oilseed crop, and even the South American corn crop,” Morris said. “And what we saw was drought-like conditions in Argentina, Paraguay, Uruguay, the southern part of Brazil. And so we’ve certainly reduced the crop supplies in the Southern Hemisphere.”

He said the drought in South America will limit the ability of the largest soybean processor in the world — Argentina — to run.

“That’s the biggest supplier of meal and oil to the world,” Morris said. “They have challenges with the crop production. They have challenges with reluctant farmers — a reluctant farmer to bring this grain to market in an inflationary environment.”

In Ukraine, several factors are at play, Morris said, noting that ADM’s presence in the country is relatively small. He said ADM has one crush plant, a port facility and a handful of grain elevators and river terminals in the region.

“You have the near-term disruptions where you have port facilities, the grain industry, a large sunseed crushing industry essentially shut down as people prioritize their time and attention to do other things like protect their families, protect their country,” he said. “But that industry shut down.

“So you have a near-term disruption and the market is trying to figure out how do I continue to have trade flows to service customers? There will be a growing concern as we go through the next 30 days or so in terms of crop production, and what crops get planted, how much area gets planted, does the crop get planted? Are the farmers even in a position, with fuel, with equipment, with seed, to be able to plant the crop?

“So the corn crop and the sunseed crop essentially go in about the same time, so that will be a concern as we get into the month of April. You’ve got a winter wheat crop that is certainly a concern in terms of their ability to harvest. We’ve got a rapeseed crop that’s of concern as well. So you have concerns about crop production.”

Beyond the challenges of crop production, the war in Ukraine raises other potential hurdles, Morris said.

“Even if you plant a crop, what’s the extent of the damage on the infrastructure?” he asked. “How much damage have the roads taken? The bridges taken? Are there certain facilities that have taken damage? How long does it take to rebuild those?

“Do you have a workforce in a post-war environment that’s willing to come back, to actually — to come back to Ukraine? And how do they prioritize their time when you have critical infrastructure that needs construction, rebuilding? Do they come back into — when does the ag industry have a workforce that allows it to run?

“So it all kind of depends on your view of how long this lasts and how bad it is. And that helps shape your view of how big of an impact it could be.”