Futures prices for spring wheat soared 40 percent in a month and hit nearly $8 a bushel at the Minneapolis Grain Exchange on Monday, a four-year high, due to drought in the northern Plains, said the Wall Street Journal. The spring wheat prices, far above USDA’s forecast of a season average $4.30 a bushel for this year’s wheat crop, illustrate the demand for high-quality wheat despite a global glut.
The weekly Drought Monitor says 67 percent of North Dakota, the No. 1 spring wheat state, is in drought, as are 58 percent of South Dakota and 43 percent of Montana. The spring months of April, May and June in Glasgow, in northeastern Montana, were the driest, with 1.24 inches of rain, since 1918.
A grain options trader at the Chicago Board of Trade told the Journal, “I don’t think anyone expected … so much high-protein wheat would be destroyed at a level that would move these markets.” U.S. wheat plantings are the smallest since USDA began recording the totals in 1919. Smaller plantings make production – and prices – volatile when yields fall, said Rabobank. The surge in futures prices could mean higher food prices for consumers, one brokerage told the Journal.