Weather pushes wheat markets higher
North Dakota wheat producers could benefit from a rise in wheat prices at harvest time – if they have a crop to bring to market.
The drought in wheat country has driven prices to levels farmers haven’t seen a for a while.
“We see a lot of investor activity. They have been buying up these wheat futures and pushing prices up,” said Kayla Burkhart, grain division manager at CHS SunPrairie’s Minot office.
On July 5, the market saw price swings of nearly a dollar up or down, indicating how crazy the market has been lately, she said.
There was some drop in wheat futures in early July because of reports the wheat crop situation might not be as dire as first thought, Burkhart said. The drought still remains serious enough to keep things uncertain, though.
“It definitely is a problem. Some areas are going to hope for 20-bushel spring wheat, and those are major producing areas of the state,” Burkhart said.
Spring wheat prices recently went above $7 a bushel, which is a positive change from the 2016 harvest, when prices dipped below $4 a bushel. Predictions are that prices will remain high through this year’s harvest, but just how high is anybody’s guess.
“In my opinion, we rallied up pretty high and now we are going to kind of relax and come back and find a level where the market is more comfortable,” Burkhart said. She doesn’t expect to see $5 or less for spring wheat again but $10 predictions may be too aggressive. She expects prices to settle in around $6 range, based on current conditions, although weather could have a big effect yet.
“We can’t let our wheat get really expensive because the world can’t afford it. We don’t want to be driving away customers,” Burkhart said.
One of the factors that could keep prices from skyrocketing is the potential for good crops in other wheat-producing areas, such as Canada. Another is the amount of stock still on the farm.
“Right now, they are not selling and taking advantage of the rally because they are nervous about what they are producing. Hopefully, these prices are still here come harvest time,” Burkhart said.
Other commodities haven’t seen the same price spike. Corn prices have remained fairly steady. Market prices have been rising for some other commodities, though.
In early July, soybean futures were in the range of $10. The price strength is surprising, considering the high number of acres planted, Burkhart said. She expects prices to be volatile over the next couple of months as soybeans reach maturity in the growing areas across different states.
Canola prices follow soybean prices so those also have rallied pretty well, Burkhart said.
Sunflowers is where it could get interesting because acres have been steadily decreasing, she said.
“Supplies, I think, are going to get pretty tight. I think the sunflower market is kind of going to be the one to watch,” she said.