On The Farm: Low Crop Prices
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| 8/26/2009 |
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| It was probably a wise decision for Sun Prairie Grain to build two new grain storage bins this year. Each of them can hold over 700,000 bushels. Reports show this could be the largest wheat harvest in over a decade. "There`s plenty of it around, there`s going to be a big crop,” says Larry Raap, Grain Marketer for Sun Prairie Grain in Minot. Not much crop has been harvested yet, but early barley returns show a good quality crop. But what happened to the price? The price for a bushel of barley Wednesday was $1.40. Just last December it was over $4.00. "It`ll be next spring before you see much improvement in the prices,” says Raap. Raap has been in the commodities business since 1970, but recently it has been unchartered water for this veteran. A few years ago crop prices skyrocketed. "That was way out of line. It should have never gotten there in the first place,” says Raap. Wheat hit $20 a bushel. Wednesday spring wheat is at $4.70. "Totally supply and demand, a lot of supply and no demand really,” says Raap. It`s quite frustrating for farmers to try and plan in such a volatile market. Years ago it was a big deal when wheat changed $.25 in two weeks. "What probably is the most frustrating about the price and following that is that it`s not based on the fundamentals like it used to be. Short crop, dry year, prices are up. Big crop coming in, prices are coming down. Those factors are no longer the factors driving the pricing of wheat,” says Rollin Tonneson, Souris, ND Farmer. Raap says speculators in the market control a lot of money and have big influence on the crop markets these days. If they get nervous about the supply, the price can change in the snap of a finger. "In today’s market world everybody is very nervous. They don`t want to be on the wrong side of it,” says Raap. NDSU Farm Management guides show that with this price, even with a big yield, farmers will not be profitable on barley or wheat. Many of the wheat producing countries have good crops along with the U.S. Everyone is full of wheat and it`s created a logjam in the market. And with the recession, other countries are either buying the cheapest wheat or not buying at all. |
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