Farmers were already cutting down on the amount of wheat they planted this year in response to a global grain glut, but the plains have been dry this year and the U.S. wheat crop could be even smaller than expected. As you can imagine that’s having an effect on wheat prices. Benjamin Parkin writes at the WSJ:
Now weeks of hot, dry weather in the Dakotas and Minnesota have been particularly hard on spring wheat, prized for high protein content that makes it well-suited for specialty breads and pastries.
That could mean higher food prices for consumers if millers end up paying more for high-quality wheat, said Brian Hoops of brokerage Midwest Market Solutions.
The share of spring wheat in good or excellent condition fell to 37% earlier this month, the U.S. Department of Agriculture said, compared with 72% the same time last year. That is the lowest good-or-excellent rating in almost 30 years.
After rising to a four-year high Wednesday, spring wheat futures fell last week before rebounding 4% Monday morning to $7.97 1/2 a bushel.
“I don’t think anyone expected…so much high-protein wheat would be destroyed at a level that would move these markets,” said Virginia McGathey, a grain options trader at the Chicago Board of Trade.
Read more here.
You can see on my chart below that Hard Red Spring wheat futures are up 45% YTD.