For Kansas wheat, drought and Russia lead to a harvest of hard luck
06/08/2014 8:29 PM
06/08/2014 8:31 PM
If life were fair, Kansas wheat growers this month would be harvesting at least an average crop, selling it at a decent price and not watching Russia hoard all the luck.
Life instead plays jokes on America’s largest wheat-producing state:
Farmers who planted vistas of hard red winter wheat this past September, when rainfall and soil conditions appeared to be rebounding, saw a bitter winter and dry spring stunt their fields.
In mid-April, they were teased by reports that political turmoil in Ukraine could drive up wheat prices worldwide, potentially helping Kansans earn money off meager yields.
Since then, however, bumper crops out of the Black Sea region have allowed Ukraine and Russia to export at prices more than 10 percent below what Asian countries would pay for U.S. wheat of similar quality.
Adding “salt to the wound,” said Palco, Kan., farmer Mike McClellan, recent cloud bursts in his region came too late to help crops and only made the work to be done more miserable.
“Just enough rain to make it muggy and harder to be outside,” he said.
Kansans will climb aboard combines in coming weeks to cut perhaps the least amount of hard red winter wheat produced statewide since 1996, according to the trade organization Kansas Wheat.
The U.S. Department of Agriculture’s latest crop progress report rated almost 90 percent of the Kansas wheat crop at or below “fair,” with 34 percent scoring “poor” and 28 percent “very poor.”
States to the south and west performed either worse or not much better. But in other U.S. regions — from Montana and South Dakota to Indiana and North Carolina — winter wheat fields appear lush, having received sufficient moisture during the critical growing weeks.
“Of all the leading regions of the world that produce wheat, we’re in the one area where there’s the most production concern,” said Dan O’Brien, a professor of agricultural economics at Kansas State University.
Kansas City futures prices on hard red winter wheat have dipped in the past month from about $8.40 per bushel to $7. Analysts attribute the drop to easing overseas worries that Ukraine’s political upheaval could disrupt its grain exports, which typically account for 6 percent of the world’s wheat shipments.
An opposite shipment scenario may now occur: Reports this week suggest that Russia’s incursion into the Ukrainian port of Crimea could actually ensure prompt delivery of wheat exports.
And, blessed by near-record production this year, cheap wheat out of Russia and Ukraine is tempting Asian buyers to switch from the U.S. and Australian grain that has traditionally dominated their supplies, according to the news agency Reuters.
It could all leave Kansas growers high and dry — a familiar place for them of late.
“In the last six or seven years, Russia has been the largest wheat exporter and, in effect, the price leader,” said Bill Tierney, chief economist for the Chicago analytical firm AgResource Co. “If they’re willing to sell for less, everyone else has to adjust.”
A year ago the market chips fell in favor of many Kansas wheat producers, at least those east and north of Great Bend.
The June 2013 harvest filled some elevators to the brim with yields surpassing 50, 70, even 85 bushels per acre. At the same time, southwest Kansas crops shriveled in a continuing drought, with many fields so thin they weren’t worth cutting.
Although much of that year was dry overall in Kansas, wet snows and April rains in 2013 fell at just the right moment for many winter wheat growers.
Not so this spring. Central Kansas received hardly any rain. Dozens of scouts dispatched by the Wheat Quality Council, a research group, estimated an average statewide yield of 32 bushels per acre, the lowest in years.
It could prove even lower based on more recent accounts.
Farmers attending a Kansas Wheat Commission event in late May reported acres of 30-bushel wheat, 15-bushel wheat and next to no bushels.
“It really is variable” even in fields a few miles apart, said David Radenberg, who owns ground in Ellsworth, Barton and Rush counties.
The better yields depend on “whether you happened to be under the right cloud,” he said.
Winter seemed to bring the right clouds, just not the right temperatures.
Snows that covered Kansas often weren’t deep enough to protect wheat from sub-zero freezes. As in Kansas City, the white stuff came amid bitter cold, making for dry snows that did little to help soil moisture supplies.
Radenberg said that when dry snow fell, he could scoop up 12 inches into buckets, place them in his house and discover “just a dribble” of water left when the samples melted.
A bad season for Kansas wheat growers doesn’t necessarily mean much higher prices for bread at local grocery shelves.
For consumers, wheat shortages can mean paying 2 or 3 percent more for a loaf. But many other forces drive the cost of bread, including fuel prices, milling expenses, baking costs and grocers’ overhead.
For a 1-pound loaf costing $1, the U.S. farmer pockets 5 cents, according to data put out by the Texas Wheat Producers Board.
Still, because booming wheat production in Russia and the European Union will probably make up for any shortages in America’s breadbasket, the prices fetched by domestic growers haven’t changed much over recent seasons.
Here’s how the math goes for the Kansas grower, based on a simplified rule that each wheat bushel makes 67 loaves of bread: Last year, an average 1,000-acre field equaled about 3.3 million loaves. If a nickel of each loaf went to the farmer, that’s about $170,000.
But if this year’s wheat yields are half what they were in 2013, it would mean half as many loaves and about $85,000 less produced from the same farmer’s field.
It seems to be shaping up that way for McClellan in north-central Kansas.
He said he might yield 25-bushel wheat — about half of last year’s yield — on 2,000 acres still salvageable.
Another 300 acres were so short on wheat, he destroyed the field with herbicide.
“We still haven’t had any significant moisture” to make him plant a second crop there, McClellan said this week.
Hope sprang early this month. A downpour soaked nearby Hays, Kan., where McClellan was attending a daughter’s basketball game. Driving home, he anticipated the storm to have drifted over to his parched property in the next county.
His rain gauge delivered the latest joke: barely a tenth of an inch.