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.

By Bruce Kennedy Apr 24, 2013 7:23AM

Credit: © Kirk Strickland/E+/Getty Images
Caption: Winter Wheat with BarnBoy, 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.


More on moneyNOW

106Comments
Apr 24, 2013 10:38AM
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The price of wheat was $10.00 a bushel last summer.  Right now it is $7.80 per bushel so the 15 percent increase brings the price to $8.97.  That's a dollar a bushel lower than last summer, so how does this translate to an increase in bread prices.  Even if wheat prices really were going up, there is only about 10 cents worth of wheat in a loaf of bread anyway.  Don't believe it when they blame high food prices on the price of grain.
Apr 24, 2013 10:40AM
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This is horrible reporting. Yes, Americas Breadbasket had a significant freeze last night, but this is actually the third freeze that we have had now this "spring". The honest truth is that this freeze will hurt me and my fellow farmers bottom line, but consumers will likely not feel the sting because globally there is a surplus of wheat that will mostly cushion the blow. We are talking a cents/bu increase in price (maybe). When you take in consideration that one bushel (bu) of wheat will make 70 loaves of bread, well, it becomes pretty easy to see that this article is fear mongering at best. The good news is that yes, we are almost out of the drought we have been mirred in here in NW Ok, but our lakes and ponds are still very low, so it's a long, slow climb back to "normal". If you have any questions please reply back to this thread and I will be happy to answer them as time allows (busy day ahead on our farm). Thanks and have a great day!
Apr 24, 2013 10:06AM
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So don't export any so we don't have to pay have such high prices.
Apr 24, 2013 11:01AM
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There's always some reason they can find to raise prices. We have so much wheat and corn stockpiled it's not even funny. Then we export millions of tons to the world. I grow as much of my own as I can. Groceries are at least 130% more than they were even 5 years ago. I never thought I'd see the day that a loaf of bread was more expensive than a pound of steak, or a pound of chicken is as expensive as a pound of steak, and pork is dang near as expensive as steak. Lobster is less expensive than a good cut of beef, but neither one could I afford. Ground Beef on sale is $4/lb., that's ridiculous. Green beans are $1.29/lb. on sale, that's crazy. A bag of lettuce is $4, that's ludicrous, it's not even a pound. I cringe every week when I have to go to the grocery store, especially since my paycheck has shrunk thanks to the extra taxes and insurance costs, to what I was making 6 years ago. I guess that's our "change" we were promised.
Apr 24, 2013 10:17AM
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The real problem here are corporate farms. Smaller grain acreage doesn't drain an entire aquifer in a couple of years that takes eons to replenish. A broader plan with agriculture balanced where and near people would stabilize supply and prevent weather anomalies from wiping out concentrations. All we need is to replace Congress with genuine Americans with ALL of America's best interests in mind and NO lobbies stuffing the back pockets. Time for change folks... it's us or bust.
Apr 24, 2013 11:05AM
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It's not just bread...all food prices have went up and continuing to rise....milk now at 4 bucks per gallon, meat, ceral, mayo, eggs, etc.  No wonder 50 million americans are on food stamps.  When Obamacare kicks in next year, most full time employees will be knocked down to 29 hours per week so employers don't have to pay a penalty for Obamacare.  Then probably alot more americans will be on food stamps.  Our government gives billions to other countries which would feed alot of americans....country going to hell fast.
Apr 24, 2013 10:25AM
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tine to keep the wheat here in the States, so Americans can have lower prices. Bread is so high priced now, it was 29 cents back in the 60's and 70's. The 80's saw it rise to about 99cents but over $2.00 now and rising that is price fixing....


Apr 24, 2013 9:19AM
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Rising bread prices was the seed the blossomed the French Revolution. It reached a point with all of that Bernanke-like fiat-printed money diluting the economics, that farmers couldn't afford to grow the grain and bakers couldn't afford to make it and price it out of the reach of consumers. The saying Let them eat cake... was a response to the Royal Bakers pumping out huge amounts of bake goods daily and then throwing most out in the evening. If we don't compromise Too Big To Fail and actually do it, we'll be on course to repeat that history as early as this year.
Apr 24, 2013 10:21AM
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Well, no more bread for me.  The restaurants will be raising their prices, especially the Italian restaurants because they use flour for their rolls and wheat as well for pasta.  Other restaurants will charge you for rolls and bread.  I don't eat out any more.
Apr 24, 2013 10:59AM
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lmao....what else is new...it's either to hot and prices are going up or it's to cold and prices are going up...what a crock.
Apr 24, 2013 10:37AM
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Still waiting for the "cake" the politicians promised....
Apr 24, 2013 10:50AM
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You can only hope they feed their own nation first "before" exporting. But hard red winter wheat is not what is used for all things bready..... You do not use it for biscuits, cakes or artisian breads etc. as it would do poorly as. It is used for heavy denser breads whole wheats and grains breads.  It shouldn't affect all bread products if it does, then the Govt needs to jump on the thieves and price fixers.
Apr 24, 2013 10:31AM
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Good thing I don't  eat that much bread to begin with all the highly over processed chemically added flour they have nowadays it is not good for you and creates stomach problems for a lot of people.
Apr 24, 2013 11:26AM
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hmmm...   Remember last years supposed Corn harvest disaster due to drought?   Turns out Corn turned in a bumper crop.  The government numbers were wrong...

The price of bread will go higher, due to excess money printing.  In the mean time wages will decline due to inflation, and inability to increase labor rates.  This is the classic way 'money printing' attempts to create  jobs.   Lower wages should create more employment., so the Keynesian theory goes.  But in reality it just destroys the savings and pay checks of the poor and middle class.

We need GROWTH (and not growth by changing the fomula), LESS GOVERNMENT, lower taxes and real demand.  Government cannot create  real demand, as it must FIRST destroy demand by taxing, borrowing or printing.   

This is why after 6 trillion in deficit stimulus spending demand has not increased one iota.

Apr 24, 2013 11:13AM
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America needs to support, protect and respect the production sector of our economy. Almost no American knows anything about the production sector from actual experience. This will be at our devastating peril.
Apr 24, 2013 11:04AM
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This article is full of half truths. Don't believe everything you read.
Apr 24, 2013 9:20AM
Apr 24, 2013 11:21AM
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Not surprised. Everything else is going up - except my paycheck.
Apr 24, 2013 11:13AM
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Maybe Monsanto should make a weather proof genetic wheat plant?
Apr 24, 2013 10:38AM
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