Wheat Prices Break
by Editorial Board
Wheat prices briefly soared past $9 a bushel last week, setting a new record price.
The high prices were helped with the world supply-demand estimates being released by the U.S. Department of Agriculture mid-week. The World Agricultural Outlook Board of USDA stated U.S. ending wheat stocks are at 362 million bushels - their lowest level since 1973-74.
Combine that with poor crops in other major wheat-producing countries: Australia, Canada and the EU crops all are suffering, and their bad fortune leads to an estimate for 2007-08 world stocks to be at 112.4 million tons, the lowest in 30 years.
American farmers are all over the map on this one.
Some sold early when the prices were in the $4-plus range and celebrated that even that price was beyond anything they had experienced in recent years.
The abnormal fluctuations must be literally keeping some farmers awake at night. Marketing decisions usually amount to a few cents a bushel one way or the other. It isn't often they can watch the commodity double in price during a single season.
With each passing week, the market simply has continued to escalate with no apparent end in sight.
Certainly there are plenty of farmers wishing they had held onto their crop a little longer, but wheat - like everything else - is a matter of supply and demand.
Most observers predict the wheat price phenomenon will continue since there is only a limited supply of wheat yet to be harvested around the world this season.
But farmers need to pay bills and can't always wait for grain prices to rise to the level they desire.
At the same time that wheat prices rose to record levels last week, so did oil prices. Farmers know how dearly fuel and other input costs have risen this year.
For a number of years, the cost of producing a bushel of wheat has been spiraling upward including the price of land, machinery, chemicals, seed, and especially fuel.
For the wheat farmers of the West, the fact that the value of their product finally caught up with inflation has been a long time coming and they worry it will be too short lived.
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