Planting problems may limit benefit of wheat rally for region's farmers

Some of the world's key wheat-producing areas are too dry or too wet, and that's pushed up prices for the crop -- more than $1 per bushel, in some cases.

Some of the world's key wheat-producing areas are too dry or too wet, and that's pushed up prices for the crop -- more than $1 per bushel, in some cases.

Though wheat gave back some of its gains last week on news that Russia will drop its export ban on wheat on July 1, weather concerns worldwide are expected to keep wheat prices strong.

But it's unclear how much benefit wheat farmers on the Northern Plains will enjoy. They're in one of the areas struggling with excess moisture, which likely will reduce how much wheat they plant and harvest.

"It's been a challenge," says Randy Englund, executive director of the South Dakota Wheat Commission in Pierre, says of planting this spring.

Farmers in the northeastern part of the state have been particularly hampered by wet fields, he says.


Only 73 percent of South Dakota's spring wheat crop had emerged by the end of May, according to the National Agricultural Statistics Service, an arm of the U.S. Department of Service.

Normally, 96 percent of the crop has emerged by the end of May. Because this year's crop is less advanced than usual, it's at greater risk from midsummer heat.

Wet fields have caused even bigger planting delays for wheat farmers in North Dakota and Montana.

Widespread problem

Other parts of the world are struggling with excess moisture or drought, too.

"It's a production issue," Mike Krueger, president of the Money Farm, a grain marketing advisory firm in Casselton, N.D., says of the upward pressure on wheat prices.

Among the factors he cites:

- Drought on the Southern Plains is hurting the U.S. winter wheat crop.


- Parts of Western Europe are dry, which is expected to cut into wheat yields.

- There's concern about how drought in parts of China will affect its grain production.

- The wet spring is cutting into wheat acreage in the Canadian prairie provinces.

At the same time, world demand for wheat remains strong, Krueger says.

The combination of factors drove Minneapolis wheat futures in May to their highest levels since 2008. Higher futures, in turn, pulled up prices at area grain elevators.

New crop wheat, or wheat that will be harvested this fall, generally was selling in early May for $8 to $8.50 per bushel at area elevators surveyed weekly by Agweek.

By late May, as worldwide weather concerns intensified, new crop wheat generally was selling for $9 to $9.50 at the elevators.

Old crop wheat generally fetched $9.25 to $10.25 at those elevators in early May. By the end of the month, old crop wheat was fetching $10.50 to $11.75 at the elevators.


Some of the increase was lost after Russia, formerly one of the world's leading wheat exporters, announced that it will end its export ban on the commodity July 1. The ban, implemented last summer, helped to push up wheat prices a year ago.

But poor growing conditions worldwide, including France's worst drought on record, are expected to limit the impact of the Russian announcement, Krueger and others say.

Marketing decisions

Mike Hanson, a Goodridge, Minn., farmer, began selling a portion of his anticipated 2011 crop in late 2010 at a profitable price.

Wheat prices have risen since then, but it still made sense to lock in part of his crop at a profit, he says.

Hanson already is thinking about selling some of his 2012 wheat crop at current prices.

Krueger estimates that 10 to 15 percent of North Dakota's anticipated 2011 durum crop has been sold in advance and that about 20 to 30 percent of the state's anticipated spring wheat crop has been sold already.

Area farmers naturally are reluctant to pre-sell a large portion of their potential 2011 wheat crop when planting conditions are so shaky, he says.

With so much concern and uncertainty in the world wheat market, farmers face difficult marketing decisions.

Krueger's take:

"Out position is, we're sitting back and letting this unfold," Krueger says.

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