The drought that plagued the winter wheat crop farther south has extended its grip into the American spring wheat belt. Crop ratings are falling and that’s supporting wheat futures prices.
That’s good news for farmers because grain futures are being generally pressured down by good growing conditions for corn and soybeans.
North Dakota is the king of U.S. spring wheat with 48 percent of the 14.1 million acres seeded in 2005. Montana had 18 percent and South Dakota 13 percent.
Most of South Dakota is in moderate to severe drought and a large part of central North Dakota is in moderate drought.
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The weekly United States Department of Agriculture crop report on June 26 again downgraded the spring wheat crop. It said 57 percent was good to excellent, 26 percent fair and 17 percent poor to very poor. Last year at the same time the crop was rated 77 percent good to excellent, 18 percent fair and five percent poor to very poor.
The North Dakota crop condition June 26 mirrored the national spring wheat report.
The South Dakota report said 49 percent was in poor to very poor condition and only 26 percent was good to very good.
The U.S. National Weather Service’s National Climate Prediction Centre forecast provides two-week, one-month and three-month forecasts. These forecasts give no indication that weather in the region is going to turn wet during the wheat crop’s key development stages.
If the U.S. spring wheat crop is a disappointment, it should give strong support to American wheat prices.
What that translates into for international prices will depend on how other wheat crops fare. If big wheat crops are harvested elsewhere, world wheat prices might not climb as high as U.S. prices.
North Dakota also has been in the headlines for another reason.
In May, several companies announced related projects amounting to an investment of almost $400 million Cdn in Jamestown.
There is a 380 million litre per year ethanol plant worth $174 million built by Cargill, a wealthy North Dakota entrepreneur and Great River Energy.
Cargill will also expand its malting plant, increasing production to 28 million bushels from 20 million at a cost of about $37 million.
The ethanol plant and Great River Energy will own a new coal fired electrical plant generating 45-47 megawatts.
The synergy is steam produced by the generating plant. Malt and ethanol production require large amounts of steam and when generated by natural gas, it constitutes a large percentage of overall costs. The coal fired electrical plant is not large, but its steam will be cheap compared to that produced from natural gas, helping to make the ethanol and malt plants more competitive.
These are big, costly industrial operations, but the concept of building close to each other to create synergies has merit on many scales.
For example, researchers in Manitoba are looking at a greenhouse attached to a hog barn to capture the barn’s waste heat.
At Rosetown, Sask., people are looking into building a greenhouse that will capture the waste heat from a natural gas pipeline compressor station.
With energy costs now a major consideration in almost all developments, joint ventures that share energy costs are sure to have a competitive edge.
