Record cold will mean costlier bread
It's known as winter wheat and is key to flour and exports, but freezing temperatures have added to drought to slash production figures.
Boy, was the groundhog wrong. It seems the winter weather currently gripping much of the Midwestern U.S. just won't let go. But this cold spell is more than just an annoyance -- it's creating some major problems for the nation's economically important wheat crop.
Record low temperatures, combined with the ongoing historic drought, are damaging winter wheat across the Great Plains states. And that will likely mean higher prices through much of the food chain.
The U.S. is the world's largest exporter of wheat -- and industry analyst estimates compiled by Bloomberg say American wheat farmers will most likely lose about 25% of their hard red winter wheat this season.
And hard red winter wheat is a big deal. It's the class of wheat used for many breads and in all-purpose flours, and it accounts for more than 40% of the overall U.S. wheat crop and half of U.S. wheat exports. Bloomberg reports that Societe Generale estimates wheat futures prices will jump by 15%, to $8.50 a bushel, by the fourth quarter.
Winter wheat is sown in the autumn, goes dormant over the winter and starts growing in the spring. But this month in Kansas, the state with the largest wheat production, temperatures dropped to their lowest levels for the first half of April in more than a century.
"I’m going to assume 75% of my wheat froze," Gary Millershaki, a farmer in southwestern Kansas, told Bloomberg about his 2,800 acres of hard red winter wheat. "It looks like someone sprayed a defoliant on it."
Food Business News, quoting the latest U.S. Department of Agriculture weekly crop report, says overall growing conditions in the 18 major winter wheat states had 35% of the crop rated at good to excellent, compared to 63% during the same time period a year ago, with 32% of the current wheat crop rated fair and 33% at poor to very poor.
At the same time, U.S. government estimates say global wheat supplies will drop to a four-year low in 2013, with production also declining in other major wheat producing countries.
There's one bit of silver lining, according to Food Business News. "Exceptional” drought conditions in some wheat-growing states, particularly Nebraska and North Dakota, are decreasing. And as of last week, moderate or worse drought conditions in the Lower 48 states fell to less than 50% for the first time since last June.
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