Low wheat prices leave a gluten glut at Midwest's grain elevators
The sun hasn't been up long in Kingfisher, Okla., but it already feels like it's burning. Trucks are moving wheat as people try to get their work done early. It looks like business as usual for a hot summer day an hour northwest of Oklahoma City.
Henry Senn, Jim Willms and Bill Stolz come to CHS Plains Partners, the local grain elevator, just about every day to share stories from the good old days and talk about wheat prices.
They harvested their wheat in early June, but with spring floods, the quality of the wheat wasn't good. That's one of the factors driving down prices and keeping the grain elevators at capacity.
Right, now, the price for a bushel of wheat is slumping to just over $5, the lowest it's been in five years, and these farmers that costs them a lot of money — as much as $20,000 or $30,000 for an average grower, Senn says.
"Three years ago, the average wheat price in the United States was $7.70 a bushel, and it cost about $4.75 to produce it. There was a lot of profit," says Oklahoma State University professor Kim Anderson, who helps farmers figure out when to sell their wheat. "You could make a lot of money raising wheat, and so farmers raised wheat."
So, over the past several years, supply on the world market has been steadily increasing, but demand hasn't been.
And that's not the only factor. The value of the dollar is up, making it more expensive for overseas customers to buy American wheat. Jay Minton manages several grain elevators for Plains Partners in Oklahoma.
Jay Minton, who manages several grain elevators in the area for Plains Partners, says about a third of the 2015 harvest there has been sold.
In the Kingfisher elevator, Senn absently drums his fingers on the folding table as coffee time nears an end. He and his friends say they have extra income from oil and gas wells, so Senn says they haven't sold any of their 2015 crop.
"Not a bit. You probably haven't either? You haven't either," he says. "We're hoping, surely, it'll make a little spurt before the first of the year. Usually does."
Whether the wheat price rallies or not, these men are off to work. Today, they're spraying weeds and preparing the ground for next year's crop. Planting starts in less than six weeks.
— via NPR News