Wheat prices have pushed up through the $5 barrier locally as markets respond to a persistent drought in the heart of U.S. wheat country, Southwest Farm Press reported.
Trading in wheat markets this week has also been affected by weather concerns in the Black Sea region. Traders jumped on the developing dryness in eastern Ukraine through southern Russia and into western Kazakhstan, only to be reminded by SovEcon, a grains analytical firm actually located in Russia, that the wheat crop is just fine.
Steve Young, grain merchandiser at CHS Grainland in Haxtun said the wheat price, which rose to $5.04 a bushel on Thursday, is being bolstered by poor growing conditions elsewhere.
“There are a variety of reasons for (the price hike) but the biggest reason is growing conditions in Texas, Oklahoma and Kansas,” Young said. “The market has reacted to that, and we’re seeing some guys taking advantage that.”
Dr. Stephen Koontz, professor of agricultural and resource economics at Colorado State University, told the Journal-Advocate that the spike actually puts wheat back in its normal price range.
“The dry weather will mainly clean up the horrible, weak basis and clean up the poor protein wheat around,” Koontz said. “The world supply and demand situation still shows a lot of worldwide wheat. There is plenty of wheat out there but just not here in the US. So we see higher prices but no real strong upside potential. We’re just back to normal prices.”
Young said he doesn’t remember when wheat prices were this high before, but said the price hit $4.80 briefly last year when hot, dry weather hit the same area, but unexpected rainfall there quickly brought prices back down again.
Last week, Russia’s Prime Minister Dmitry Medvedev said the country’s sales of grain abroad have grown significantly in the first four months of the year.
“As of the end of April, grain supplies increased by more than 42 percent,” Medvedev said on Friday. Last year, Russia exported $21 billion worth of grain, which is bigger than revenues from arms sales, Medvedev said.