High wheat prices caused by drought, increase in demand

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Wheat prices across the country are some of the highest farmers have ever seen. This means more money for those growing the crop, but it also means higher prices for production agencies and consumers of wheat products.

Mike Woolverton, K-State grain market economist, said wheat prices have skyrocketed because of a shortage of healthy yields worldwide from drought and increased demand. He said because of growth in the global economy, people are buying more food and increasing demand, resulting in higher prices.

“In the past, the value of wheat was about seven cents in a loaf of bread,” said Woolverton, visiting professor of agricultural economics. “Right now, it’s 17 cents in a one-pound loaf of bread. We can get about 70 one-pound loaves out of a bushel of wheat.”

As of Thursday, he said the price of wheat per bushel was $10.29 in Kansas City.

“I don’t recall wheat prices being this high in a long time,” said Jim Shroyer, K-State Research and Extension crop production specialist. “Usually farmers get really tickled when it gets to $5 or $6, so that’s just unbelievable it’s at $10.”

Wheat prices are even higher up north. Shroyer said hard red spring wheat was $20 a bushel in Minneapolis, which had crop specialists worried Kansas farmers would try to grow spring wheat and attempt to sell it in northern states. This, he said, most likely would have resulted in a unsellable crop.

Shroyer said spring wheat is considered the Cadillac of wheats because of its high protein count, where as hard red winter wheat – what Kansas wheat farmers typically grow – is just the Chevrolet. But winter wheat requires a cold period of three to six weeks before it can green and eventually produce a solid grain, making Midwest weather ideal for growing conditions. Spring wheat, however, does not need that cool period. It is planted in the spring and cut in late summer.

“If you did that here, the spring wheat would not produce all that much, because our summers get hotter than up north,” Shroyer said.

Yet, because of a lack of precipitation across the Great Plains this season, winter wheat has not been doing so well in parts of the region, he said.

TIME IS EVERYTHING

Woolverton said the condition of the crops varies greatly from farm to farm. He said the wheat in the Riley County area has been promising, but across western and southwest Kansas, as well as the panhandles of Oklahoma and Texas, a large amount of wheat has been coming up within the last month or so, which he said is not a good sign.

“If you planted last fall and it isn’t coming up until now, you know something’s wrong, and that’s lack of water like in western and southwest Kansas,” he said. “Right now, we’re watching the wheat-growing conditions in western Kansas, and it’s really suffering from dry weather. The rest of the state looks good, but we’re keeping a close eye on crop conditions.”

Woolverton said it is still too early to predict what the final outcome of the crops will be, but farmers will be receive more money for it than they ever have.

But because of these higher prices, Shroyer said consumers and production companies are having to spend more on production and product costs, and it is not just wheat products like breads and cereals that are more expensive for consumers. It is also dairy and meat products and almost anything animal-based.

“Any animal that eats the grain,” he said, “those costs are going to be high too.”

COOP-ERATION

Darin Marti, general manager for the Farmers Cooperative Association Manhattan grain elevator, said the higher costs also have affected crops.

“The biggest thing I’d say it’s doing to us as business is that it’s increased our handling costs and costs of operations,” he said. “When the grain prices are high like that,

it takes more money to carry in inventory, so we’ve got a lot more interest costs too.”

Marti said though farmers might seem to be basking in the prices, they probably are not making much more than when prices were more stable.

“I think those that have been able to take advantage of the price really have had an advantage, at least for this year,” he said, “but a lot of people sold early before the price hit the top, so it didn’t help them as much. On the downside, the high grain prices have allowed for the raise of fertilizer prices. So if a farmer did not purchase at a lower price, he’s probably still not gaining a whole lot with the high grain prices.”

However, Woolverton said he does not predict these prices to stay high for long.

“I suspect that by the time we harvest wheat in Kansas this summer,” he said, “prices will be down from this.”

But wheat prices are going to remain fairly high until the global supply can be replenished, he said, which could take two years of crops.

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