The waves of grain on David Schemm’s 5,000 acres planted in west-central Kansas are beginning to turn brown after the driest March in Kansas since 1997 hurt crops.
“If it doesn’t rain, I’m not even sure I’ll have wheat to harvest,” said Schemm, 43, who farms near Sharon Springs. Without above-average precipitation in the next two months, he expects yields to fall as much as 36 percent below average after drought compounded damage from freezing temperatures earlier this month.
Growers in Kansas, the biggest U.S. producer, will collect 299 million bushels, down 6.3 percent from 2013, according to the average of 14 analysts surveyed by Bloomberg. Yields may fall 1.3 percent, the survey showed. Severe-to-exceptional drought conditions expanded to 72 percent of the state on April 22, up from 43 percent on March 25, according to the U.S. Drought Monitor. Wheat futures in Chicago gained 16 percent this year.
“We will have a smaller crop than last year, because it’s too late to reverse the drought and freeze damage,” said Shawn McCambridge, the senior grain analyst at Jefferies Bache LLC in Chicago. “Prices will stay firm because Kansas is an important part of determining U.S. supplies.”
The average cash price of U.S. hard red, winter grain grown across the southern Great Plains and used to make bread, is up 20 percent this year, data from the Minneapolis Grain Exchange show. World food prices climbed 2.3 percent in March to a 10-month high as grain prices jumped the most since July 2012.
More than 75 traders, farmers, grain buyers, flour millers and bakers, including representatives from Wal-Mart Stores Inc. (WMT:US) ConAgra Foods Inc. and General Mills Inc. (GIS:US), will tour fields across the state beginning today to measure production potential during the annual Wheat Quality Council Tour. The group will issue a crop forecast on May 1 and the U.S. Department of Agriculture issues its first estimate on May 9.
If growing conditions are favorable for crops worldwide, it will help make up for U.S. losses, said Bill Maskus, the grain manager for Pride Ag Resources cooperative headquartered in Dodge City, Kansas, with 15 locations and 20 million bushels of storage capacity across seven counties. Kansas produced about 1.2 percent of the global crop last year.
Most crops from the U.K. to Russia are in good shape after warm weather limited damage from freezing temperatures this year, Maskus said. Global inventories before the start of the Northern Hemisphere harvest will rise 5.7 percent this season, the first increase in three years, the USDA said April 9.
“Just because the crop is smaller in Kansas, doesn’t mean prices will continue to rally,” Maskus said. “There’s enough global supply to offset the shortfall.”
Kansas moisture in March was 19 percent of normal, the 10th driest since 1895, and April has been just as dry, according to Mary Knapp, the assistant state climatologist in Manhattan, Kansas. Rain in March and April are critical for yields because plants begin to grow again after exiting winter dormancy and soils are recharged for plants to make grain in May and June, she said.
Large areas of fields are already turning blue, signaling increasing moisture stress, and some plants are dying, said Jeff Kahle, the managing director for United Plains Ag Cooperative in Quinter, Kansas. Many plants are three weeks behind normal development and are just now entering the key growth period when more rain will be needed.
“If we don’t get widespread, heavy rain in the next two weeks, it will be a disaster,” said Kahle, who has been buying wheat for 30 years in Kansas. “Yield reduction has already occurred.”
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