With demand soaring abroad and droughts crimping supply, the world's wheat stockpiles have fallen to their lowest level in 30 years, and stocks in the United States have dropped to levels unseen since 1948.
CHICAGO — For decades, wheat was a commodity no American needed to think much about, except the farmers who grew it. The grain was usually plentiful and prices were low.
All of a sudden, those assumptions have been turned upside down. With demand soaring abroad and droughts crimping supply, the world’s wheat stockpiles have fallen to their lowest level in 30 years, and stocks in the United States have dropped to levels unseen since 1948.
Prices have been gyrating in recent days as traders tried to figure out what to make of the situation. On Wednesday, prices for a sought-after variety, spring wheat, jumped to $17.14 a bushel on the Minneapolis Grain Exchange, the latest of several records.
Prices for common wheat are up nearly 50 percent since August, and they are up even more for the most sought-after varieties, leaving buyers, growers and longtime commodity traders shaking their heads.
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“Anyone who tells you they’ve seen something like this is a liar,” said Vince Boddicker of Farmers Trading in Mitchell, S.D.
Though this week’s prices were nominal records, the inflation-adjusted record for wheat was set in the mid-1970s, when it exceeded $20 a bushel in today’s dollars after huge sales to the Soviet Union.
Foreign buying is driving this market, too, but these buyers include South Korea, Taiwan, Mexico, Nigeria and Venezuela. Economic growth abroad has given people the means to improve their diets, and they are developing a taste for products made from wheat.
Among the consequences are stretched wallets at home and abroad as food processors pass along higher costs.
“When the price of your raw material quadruples, you can’t afford not to raise your prices,” said Timothy Dodd, president and chief executive of Dakota Growers Pasta Co. in Carrington, N.D. “Otherwise you’re out of business.”
To decrease volatility, three U.S. exchanges that trade wheat-futures contracts have raised the daily limit on price movements from 30 cents to 60 cents during the past week.
For the moment, the mania appeared to be halted in Chicago and Kansas City, Mo. March prices for soft red winter wheat was unchanged Wednesday at $10.07, in Chicago.
Few farmers have enough wheat on hand to take advantage of the recent increases, the trader said. Most sold last fall for prices that seemed good at the time.
The U.S. Department of Agriculture’s 10-year forecast sees the wheat shortage as temporary.