Low Grain Stocks Push Prices to New Highs
Grain prices roared to fresh highs Friday on fears that continuing dry and cold weather in the heart of the American Farm Belt will drastically cut crop output at a time world grain stocks are perilously low.
Wheat prices soared but then closed lower at most markets as traders frantically cashed in on profits from one of the biggest rallies in history. But corn prices kept rising.
Corn prices at the Chicago Board of Trade pushed through the $5 a bushel barrier for the first time ever, hitting a new high of $5.09 in the May futures contract. That contract ended at $5.075, up 8.5 cents.
May wheat futures in Chicago locked up the 20-cent per bushel daily trading limit at $7.165 a bushel.
But forward contract months that call for delivery after the harvest, which begins in June, fell back on profit-taking.
That trend also sharply hit Kansas City Board of Trade May wheat futures, which soared to a new all-time record at $7.44 in early trade before closing at $7.22, down 12 cents.
That contract had been threatening the record high for a wheat futures contract of $7.50 a bushel set on March 20 at the Chicago Board of Trade.
On Monday, wheat crop specialists are scheduled to tour the drought-stricken U.S. winter Wheat Belt from Texas to Kansas.
“It’s going to be really interesting to see how everybody reacts to this. I think a lot of people that haven’t been out yet don’t believe the crop is as bad as it is,” said Rollie Sears, a wheat breeder at Kansas State University.
Sears said the wheat crop in Kansas, which produces up to a quarter of total U.S. winter wheat, was the worst he’d seen since he first arrived in Kansas in 1979.
U.S. Agriculture Secretary Dan Glickman, on a tour of Texas crop areas Friday, said he is concerned.
“This is now becoming a national and a worldwide problem in terms of what it’s doing to the production of grains as well as what it’s doing to the cattle industry [by] high grain prices and nonavailability of feed,” Glickman said.
Glickman approved emergency measures to allow grazing of cattle on acreage set aside for conservation purposes.
Grain traders had been expecting the markets to take a breather Friday from the dizzying rise that has doubled wheat and corn prices in the last year.
The London-based International Grains Council on Thursday said that wheat stocks worldwide are the lowest in two decades and, because of U.S. crop problems, prospects for rebuilding them to safe levels may have to wait a year or more.
It may take even longer if brutal crop weather in the U.S. Farm Belt does not improve.
