When wheat prices go up, so do the number of minutes used on Jason Kelley’s cell phone.
“The phone is really ringing now,” Kelley, the Extension wheat and feed grains specialist for the University of Arkansas Division of Agriculture, said in late July. “Wheat is coming back.”
Kelley said growers’ interest is being stimulated by talk of $6-a-bushel winter wheat.
“Wheat is on a rocket ship right now,” said Scott Stiles, Extension economist-risk management. On July 30, “July 2011 futures closed at $7.10, the highest it’s been since June 12, 2009.
“We’ve seen a $1.44 — (or) 25 percent — jump this month.”
The rise isn’t related to U.S. supplies. The USDA is projecting year-end stocks to be at its highest levels since 1987, a little more than 1 billion bushels.
“Traders are more concerned about production problems in other parts of the world,” Stiles said. “Russia and some of the former Soviet republics are facing a terrible drought. Russia has been a fierce competitor for the U.S. in key wheat export markets such as Egypt.”
It’s not just Russia either. The USDA has lowered its July production estimate for Canada and the European Union to 187 million tons from 194 million tons in June.
“You have good prices, and relatively low input costs and on top of that … rice, soybean, corn and cotton crops are all maturing ahead of schedule,” said Stiles. “It’s nice to have a positive spin in wheat for a change.”
Last year’s wheat outlook was as dark as the skies between August and December as wave after wave of rain made the 2009 harvest seem endless and didn’t help the few farmers who wanted to plant wheat for 2010 spring harvest.
“Last year, we kind of gave up on wheat because it was so late,” Kelley said.
The good news is that winter wheat turned out to be much better than expected.
Arkansas producers planted 210,000 acres last fall, down from 430,000 acres planted the previous year, according to the National Agricultural Statistics Service. As of July 15, some 170,000 acres were harvested, with average prices per bushel bottoming out at $4.26 in February and March, from the high of $4.81 in January, NASS said.
After the snow went away, “we had awfully good weather and had very good wheat fields in a lot of areas,” said Kelley. “In our verification program, we only had six fields, but we averaged close to 75 bushels per acre.”
Producers usually make a call on whether or not to try wheat at this time of year.
“They’re really taking note of the price jump,” Kelley said. “A lot of them are in a hurry to get those prices locked in and they’re making the decision now — today.”