Bloomberg News

Wheat Yields Falling on Kansas Weather to Boost Prices

May 16, 2012

Wheat yields in Kansas, the biggest U.S. producer of winter varieties, may drop by as much as a third in some counties as hot, dry weather curbs production, boosting prices that yesterday rose the most in six weeks.

Windy conditions in parts of southwest and north-central Kansas are increasing the drying effect of the hot weather and preventing the actual grain from developing inside the head of the plant, said Jim Shroyer, an agronomist at Kansas State University in Manhattan. In north-central counties of the state, fields that looked to produce as much as 60 bushels an acre earlier this year may instead yield 40 bushels, he said.

Prices are getting a boost from a U.S. government report that showed crop conditions fell in the past week, said Jason Britt, president of Central States Commodities Inc. Wheat traded on the Kansas City Board of Trade yesterday gained the most since March 30. Two weeks ago, 100 analysts and traders who toured Kansas fields found near-ideal conditions and forecast yields at a record 49.1 bushels an acre.

“The wheat tour numbers were high, so there was room for them to slip,” Britt said by telephone from Kansas City, Missouri. “That being the case, the market is going to trade these lower yields, considering we traded the higher numbers.”

Futures Advance

Wheat futures for July delivery on the Kansas City Board of Trade yesterday rose 2.1 percent to close at $6.275 a bushel. July futures on the Chicago Board of Trade yesterday climbed 1.7 percent, the most since April 27, to close at $6.085. The U.S. Department of Agriculture on May 14 said 52 percent of Kansas’s crop was in good or excellent condition, down from 60 percent a week earlier.

Little or no rain has fallen in western and central Kansas in the past 30 days, National Weather Service data show. The first chance of precipitation in the center of the state is for May 19, according to the NWS website.

“It’s looking pretty bad,” Shroyer said by telephone while on a tour of the state’s fields. “It’s becoming more widespread. The southwest part of the state looks tough. The heads are considerably lighter than I would’ve expected two weeks ago.”

Don Kuhlman, who farms about 1,300 acres including 500 acres of winter wheat near Olmitz, Kansas, in the central part of the state, said no rain has fallen on his farm in a month. The price he receives for his grain probably won’t rise much because output in the U.S. may be up from last year, he said. The USDA on May 10 forecast Kansas winter-wheat production at 387 million bushels, up 40 percent from the prior year.

‘Losing Bushels’

“There’s a lot of good wheat in the country, so I don’t think we’ll see a big price increase,” Kuhlman said by telephone. “We’re losing bushels every day. Five weeks ago we had a hell of a crop, but no rain.”

The Great Bend Co-op in Great Bend, Kansas, probably will take in about 2.5 million bushels this year, half the wheat it was expecting five weeks ago, said Rosie Meier, a merchandiser with the company. The weather in the area has cut yields as heat and dry weather hit plants when the actual grain develops.

“The crop is deteriorating,” she said in a telephone interview. “What we had five weeks ago, we probably would’ve set a record here at the co-op. The drought itself hit, and the plant thought, ‘Well, I’m done growing, and I’m going to just die.’ The head has nothing left in it, and it turned white. It hurt too because it was in the filling stage when it got so hot here.”

To contact the reporter on this story: Tony C. Dreibus in Chicago at tdreibus@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net


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