US farmers plant more wheat as prices soar
Belton, Missouri, September 30, 2007
With historically high prices for US wheat - new all-time highs were posted in US futures markets Friday - farmers are seeing this autumn's wheat-planting window as an opportunity to get on board the market's wild ride.
Wheat prices have consistently set new record highs for about two months on supply woes across the globe, from Argentina to Australia.
Early Friday, the benchmark December hard red winter wheat futures contract hit a new all-time high at the Kansas City Board of Trade of $9.49-1/2 a bushel. A year ago, the price was $4.79 a bushel.
"The price is so good. I never thought we'd see it this high," said 73-year-old farmer Tom Effertz, who along with three brothers has operated his 12,000-acre Belton, Missouri farm since 1958.
The Effertz brothers said they plan to increase the acres they plant with wheat by more than 15 percent this year.
Indeed, from Texas to Nebraska, into Missouri and even into Iowa - the top US corn-growing state - farmers are working to put as much wheat seed as they can get their hands on into the ground.
"Wheat acres, not only in the US but around the world are going up, anywhere from 3 to 10 percent," said Don Roose, US Commodities Inc. president. "It's a low input crop with a high return. And farmers like the prices."
The move come as wheat shortages are being felt around the world, driving up prices for bread and other wheat-based food products to levels that are affecting everyone from food companies to consumers.
Bob Sienknecht, an Iowa corn and soybean producer who has been farming since 1961, said the demand for wheat has pushed the crop into fresh favor with many growers in the Midwest.
He and other growers said corn acres are expected to decline in favour of wheat, as well as soybeans.
Soybeans, which are planted in the spring, have also seen record prices of late. Soybean futures at the Chicago Board of Trade hit a three-year high on Thursday with the benchmark contract at $10.17-3/4 a bushel.
Some farmers are harvesting their soybeans now and moving to immediately seed that ground with winter wheat to try to take advantage of high prices, he said.
"There is talk of a lot of wheat being planted around here next year," said Sienknecht. "A lot of people are going to put wheat down as they pull their beans up."
Bob Bowman, past president of the Iowa Corn Growers, who farms about 2,200 acres in east-central Iowa along the Mississippi River, said his land was not well suited for wheat but he was considering scaling back his corn to plant more soybeans.
Corn requires costly nitrogen applications and more fertilizer - inputs that have skyrocketed in price - than beans or wheat, Bowman said.
Ideas about dropping corn acres come after expectations for high demand for corn-based ethanol failed to come to fruition as farmers produced a record 13.3 billion bushels of corn this year.
The US Department of Agriculture said ethanol makers would use less corn -- 3.3 billion bushels -- than initially expected in the coming 12 months.
The corn craze left this fall's soybean production estimated at a short 2.62 billion bushels, down 18 percent from 2006, according to the USDA.
The USDA said Friday that US wheat production of 2.067 billion bushels, combined with poor production in Australia, Europe and Canada, would likely mean the world supply of wheat will dip to its lowest level in 30 years by next summer.
Overall, the USDA expects those shortfalls to contribute to an overall gains in US net farm income of 48 percent this year to a record $87.1 billion.
"These prices help make up for all the bad years," said Effertz. "It should bring a lot of farmers out of debt. If a farmer can't make a profit now, he probably never will." - Reuters