Agricultural News
A Slow Motion Economic Disaster Sweeping Across Wheat Country
Tue, 08 Jun 2010 7:06:57 CDT
There seems to be a double whammy hitting wheat farmers as we harvest the 2010 winter wheat crop. While we have had consistent reports of excellent test weights and decent yields, some of the early quick checks of protein that we have had to date so a crop that is lacking in protein, significantly below the 12% protein that our export market is demanding. According to Mark Hodges with the group Plains Grains, "the Gulf is not accepting wheat under 12% protein (lack of bids below 12 and lack of export sales), this has put receiving/shipping facilities in the Southern Plains under extreme stress." The uncertainty that this is providing is hitting the prices that local elevators are willing to offer to those that want to sell their wheat over the scales. "Receiving facilities are very uncertain at this point how much they may be discounted for protein in the marketplace and in an effort to protect themselves are discounting protein to the producer (by location and facility- there appears to be no uniform schedule). With the current situation there will be little movement of wheat and not enough space available for storage (if they have to go to ground storage the basis will widen even further). The current word from several receiving facilities as we pull samples is no matter what happens this year they will have protein discount schedules next year."
Some elevators are simply posting a much lower wheat price- according to the Oklahoma Department of Ag listing of daily wheat prices- Frederick now stands at $2.97 a bushel, while much of central Oklahoma is at $3.27 a bushel. The Gulf Bid has dropped more than eighty cents since the first of May, and is over three dollars a bushel less than early June of 2009.
Protein is not the only problem- there are steep discounts facing producers that bring wheat in that has foreign material in it- feral rye, cheat or wild oats for example. Farmers could lose fifteen to twenty percent of the value of the wheat they bring in if weeds are a problem.
Click on the Listen Bar below to hear the thoughts of several industry experts on these issues- millions of dollars of value of the 2010 Oklahoma wheat crop may be evaporating even as the combines roll- with warnings that for those that resist changing their cropping practices- 2011 could be even worst.
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