Here’s good news: U.S. wheat prices have hit 10-year record levels in some markets.
Here is better news: some think the full impact of today’s drought in the U.S. northern plains hasn’t shown up in prices.
“I don’t think the market has priced it all in yet,” said analyst Mike Krueger of the Money Farm in Casselton, N.D. He thinks prices could easily rise another 30 to 40 cents per bushel.
“We’ve probably already lost three or four bu. an acre in the last couple of weeks. If the weather holds like it’s projected to, then I expect we’ll lose a few more, no question about it.”
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Serious drought and high heat have struck the U.S. great plains, blasting a once promising spring wheat crop.
During the spring, the winter wheat market roared higher as lasting drought bit into the Kansas City Board of Trade’s main contract. But recently, as the winter wheat crop has come off, attention has turned to the Minneapolis Grain Exchange spring wheat futures, and every dry, hot day has helped prices catch up against winter wheat.
Minneapolis wheat futures prices have climbed 64 cents per bu. in the past two weeks, with Northland Commodities forecasting more hikes.
“Look for wheat prices to move higher,” the company said in a July 7 market newsletter.
Hot and dry conditions in the northern Mississippi basin and across most of the U.S. plains have knocked down the yield potential of the spring wheat crop.
The situation is so sudden and serious that the National Oceanic and Atmospheric Administration, which is the U.S. weather conditions service, released an unscheduled report on July 7 highlighting the situation.
North Dakota governor John Hoeven has begun treating the situation like a disaster, requesting that the federal government open Conservation Reserve Program land for cattle producers who don’t have enough hay or pasture.
He is also asking the United States Department of Agriculture to assess the drought’s impact so that the federal agriculture secretary can declare some areas a disaster.
“Crop conditions and crop loss reports, as well as weather data provided by local and state officials throughout North Dakota for this growing season, have indicated loss of crop production and quality in varying degrees due to drought,” Hoeven said in a letter to the USDA.
If prairie farmers in Canada manage to get a good spring wheat crop, they’ll have the best of both worlds: a big crop with great prices.
But the weather has been dry recently in much of Western Canada and farmers are starting to worry.
Krueger said prairie farmers may find some consolation in the fact that the market is now watching Western Canada, Australia and Argentina, and any problems in those areas will help prices climb higher.
“The spring wheat crop in the United States is getting in trouble pretty quickly,” said Krueger. “A lot of this state hasn’t had rain for a long time.”
