Kansas: Kansas wheat farmer Arland Stephens has his shiny red combine ready to roll.
Oklahoma grain dealer Joe Cullins is busy contracting semitrailer trucks needed to haul millions of bushels of hard red winter wheat—America’s main bread-making wheat—in from the countryside. And in Texas, the golden kernels are already stacking up in storage bins.
The 2008 US wheat harvest is under way, and this year’s harvest marks not only the end of another growing season for a key US crop but also the arrival of a short-in-supply food staple demanded by a hungry world.
Adverse weather could still damage crop prospects; farmers know too well not to count on their bushels until they are in the bin. But the US department of agriculture (USDA) predicts that US farmers this year will bring in 1.78 billion bushels of winter wheat during a summer harvest that stretches across more than 30 states. Harvesting of spring wheat will follow for a total of 2.4 billion bushels expected for 2008/09, 16% more than a year earlier.
Indeed, the US, the top exporter of wheat, is among the first of a group of major exporting nations to begin replenishing supplies for world wheat millers and bakers.
The harvest this year is critical as world supplies have dwindled so low that sharp price increases and food shortages have hit markets around the globe.
“We’re watching it very carefully. We’ve got extremely low stocks right now and there is no room for error,” said American Bakers Association chief executive officer Robb MacKie. “Our hope is the crop will be strong and the quality will be good.”
Following the US, Canada, another of the world’s largest wheat exporting nations, will begin cutting its new wheat crop in August, while Australia and Argentina—also key exporters to the rest of the world—expect to begin harvesting in October.
Together the four are projected to produce 129.1 million tonnes (mt) of wheat this year, about 20% of the global total.
Big wheat crops and exportable supplies are also expected in Russia, Ukraine and Kazakhstan. The biggest producers in the world—the European Union nations, China and India—consume most if not all of what they produce.
Overall, USDA has forecast world wheat production at a record 656mt in 2008/09, up 8% from a year earlier.
The harvest can’t come too soon. After poor production last year in the United States, Australia and elsewhere, global wheat supplies are at their lowest levels in roughly 30 years and are seen remaining tight amid increased consumption, according to a USDA foreign agriculture service report issued this month.
“The concerns about food shortages ... are real. We have a lot of concerns,” said Betsy Faga, president of the North American Millers’ Association.
This year will mark only the first time in the last three years that production exceeds global consumption which is projected at 642mt. A series of big wheat crops will be needed to alleviate a continuing supply squeeze.
“It’s too early to exhale,” said Alan Tracy, president of US Wheat Associates, a government- and industry-funded group that markets US wheat supplies to foreign buyers. “It all depends on how production comes together around the world. That will determine whether we get to the point where we can breathe more easily about supply.”
Industry experts say the new harvest should help partially staunch a surge in food prices that has hit bread, cereals and other products on grocery shelves over the last year.
Bread prices in the US are up more than 14% from a year ago, and they increased 1.5% in April alone over the previous month, according to the US Department of Labour’s consumer price index. Greater increases have been seen in other countries.
Prices for US wheat futures contracts spiked to all-time highs earlier this year. Spring wheat futures led increases, rising to $25 a bushel, three times the price of a year ago. Prices came down as harvest neared, with spring wheat futures back to the $10 range this week.
Yet, many onlookers expect further price relief will be only mild at best as harvest advances. Over the long term, the fact that farmers are planting more corn and other crops instead of wheat is a factor that could keep wheat supplies thin for years even as a growing world population and a rising middle class in developing nations keep wheat and other crops in high demand.
“I think it is way too early to say we’re out of the woods on the food price situation,” said Tom Jackson, an economist for Global Insight. “It is certainly pretty critical that the US have a good wheat harvest.”
For Stephens, who has farmed outside the tiny rural town of Norwich, Kansas, for decades, the onset of wheat harvest means long days of hard work. But his mood is upbeat.
“This is just the start of harvest,” he said. “But when you’re looking over the fields ... it really is a beautiful sight. It looks now like it will be a good crop.”