Dakota Drought Sparks Biggest Spring Wheat Price Spike In 7 Years

Tyler Durden's picture

The price of your bagels and pizzas are about to rise as the cost of so-called 'aristocrat of wheat' - Hard red spring wheat - is exploding on the back of a worsening drought in the US High Plains.

Futures soared as much as 8.5 percent on Thursday, the most intraday since 2010, after Canada cut its planting outlook and drought conditions expand in U.S. growing states. Prices are up 31 percent in June, beating the gains for 80 other commodities tracked by Bloomberg.

As Bloomberg reports, the northern U.S. has been plagued by dryness this year, and conditions for the domestic spring-wheat crop are their worst for this time since 1988. Now, traders are eyeing a smaller crop in Canada, too. The country’s government on Thursday cut its outlook for the total wheat acreage more than analysts expected and said canola plantings will top the grain for the first time ever.

“Millers will import wheat out of Canada if they can’t buy locally from U.S. farmers,” Brian Hoops, president of Midwest Market Solutions in Springfield, Missouri, said by telephone. “With smaller wheat acres and some production issues in Canada, as well, that means there’s less product there to market, and demand has not backed off from what we can see.”

 

“Basically, the crop is burning up,” said Joe Lardy, research manager at CHS Hedging, a commodities broker.

Data released Thursday by the US Drought Monitor show more than 90 per cent of the two states was in drought, with “severe” or “extreme” conditions in dozens of counties.

Spring wheat futures may reach the $8-$10 range, Societe Generale SA analyst Rajesh Singla said in a Thursday report. The Minneapolis exchange has set a trading volume record this month.

“Low elasticity of demand and substantial damage to the 2017-18 crop might keep inventories tight for a longer period of time,” Singla said.

 

“Rainfall in the next 15 days in the U.S. Northern Plains is likely to remain deficient, and the spring wheat crop might continue to wither.”

And if you like bacon on your pizza, then you have a double-whammy as Lean Hog Futures just hit a contract record high too...

It seems Yellen's rate-hikes are perfectly timed to quench the drought and birth some more piggies.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Stackers's picture

They panic'n out there. They panic'n. I can feel it.

Sonny Brakes's picture

I picked the right time to try and start eating right and stop drinking beer.

thedespised's picture

We're heading real fast into the book of revelation.   It's this year you know.  This makes perfect sense.

Mtnrunnr's picture

IT's almost like the climate is changing and becoming more unpredictable.

dlweld's picture

Yeah, climate change is certainly the most realistic hoax we've seen in a long time.

playit's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.jobproplan.com

Amicus Curiae's picture

and corn i gather

https://www.iceagenow.info/frozen-corn-south-dakota-late-june/#more-21790

 

however Aus produced a huge harvest so you can import from us

as usual the us$ makes it cheap for you, and our farmers get f all for their work

Pooper Popper's picture

Hey now this is serious,,,you dont mess with a mans bacon,,,,gottaa have my Meat Candy!!!

carlinhos1988's picture

I see dead people. 

Sonny Brakes's picture

Let me know once you smell them.

WTFRLY's picture

You will. The food crisis will hit America too. All part of the coming Joo World Order "event"

aloha_snakbar's picture

People can always eat their Bitcoins...

Stormtrooper's picture

Can't eat my gold/silver but I bet I can find someone who will trade some wheat for it.

just the tip's picture

where's that guy on the street corner with his bar of chocolate and a gold coin.

eat the chocolate bar then pull a gun and take the gold.

Consuelo's picture

 

 

Something about leaving that and take the cannoli...

 

 

montresor's picture

If you were looking for an excuse to try a gluten free diet here it is..

Juggernaut x2's picture

There has been a lot of money waiting to pile into one of the beaten down ag commodities - it looked like corn was going to ignite but the Midwest got rain last week so it looks like wheat is going to get slammed higher

Sonny Brakes's picture

These guys never miss an opportunity to take out their heavy pens.

Solio's picture

All I can say is glad we got barley and Scotland!

yogibear's picture

The Federal Reseve loves higher prices. The higher the better according to the 12 PhD flunkys.

Kyddyl's picture

Seniors who are mostly stuck with fixed incomes faced another year without a COLA and higher Medicare payments will be moving in with you even sooner. Check out the prices of cat food and you'll see why. Too bad about the kiddies, they'l have to eat more potato chips. T-Rump's policies are seeing crops rot in fields as migrant workers, legal and otherwise, are not crazy about coming to the US anymore. Perhaps able bodied "homeless" could put in a few hours every week and do something useful and be paid in food. I'm not being cynical here. I realize there are legitimately disabled, under served people out there, but there are also many who could and should do some work. I'm not talking slavery here either. 

carlnpa's picture

I live in the Apple capital of the world, Adams County PA.

We also have many field crops.

Absolutely no ag labor issues here, where are you seeing them?

In fact, migrants walk down my drive every week looking for work.

And 30-40% of my local taxes - which btw are outrageous - go to fund the education of the 30-40% of student body that are children of illegals.

Pure Evil's picture

Here we go once again with the open borders crowd pulling out the myth of seeing crops rot in the fields due to an inadequat supply of illegal aliens.

Any links to your lies?

rejected's picture

T-Rump's policies are seeing crops rot in fields as migrant workers, legal and otherwise, are not crazy about coming to the US anymore

You are fabulously,,,, 'full of it'. 

Migrant workers who work the fields can easily get across the border, legally. The problem is they have to be paid 'on the books'.  And cheapo Mericans don't like that.

TemporarySecurity's picture

Cat foods cheap here - it is called rabbits.  Now if I could just teach the cat not to drag them into the house to eat.

ZeroLounger's picture

Yeah, the drought's Trump's fault.  LOLOLOLOL

 

Let's be sure to ship all our wheat to some foreign countries. No need to feed our hungry and poor in America. /s

Bill of Rights's picture

And here comes inflation folks....

adr's picture

Fuck you futures manipulators. 

North Dakota drought, really? That is causing the spike. 

North Dakota is pretty much a desert to begin with. What no stories about Montana strawberries failing. 

I bet 99.999999% of the wheat contracts were traded by banks that don't even have a single bread oven. I don't think any bakery is trying to get a higher price for their flour. 

Kind of sick getting fucked over so hedge fund bankers can generate cash through contract churn and market manipulation.

The purpose of futures markets has long since disappeared. How is any actual consumer of a commodity supposed to set prices when they make up less than 1% of the contract volume. A market where prices aren't set by the consumers is no market at all.

I pray every day for a meteor to take out New York City.  

farmerunder's picture

How is it not market intereference to have the price of something set by a group who have access to the money printers and plenty to gain by controlling inflation throughout the world, yet can't actually make delivery or take possession of the physical commodity? = this is govt backed corruption.

Faeriedust's picture

Pray harder, and get a couple hundred friends to help.

Superstorm Sandy was a good first shot, wasn't it?

idontcare's picture

... and yet DBC just dropped 62 cents @401p after being up all day .... Hmmmmm.  Wheat drought might be another nothing burger.

bluskyes's picture

Food is way too cheap in Amerika / Kanada. Wheat is up 200% from late 1800s, but everything else is up 5,000%

Bellies full of glyphosate corn, and beans are the only thing stopping revolution. .gov knows that too...

mo mule's picture

Eat more rice, oh wait it's plastic rice made in China and Vietnam.  

aloha_snakbar's picture

I think many Americans could probably skip a few (hundred) meals...

how_this_stuff_works's picture

Just had another deluge here in Ohio.

It seems it's never gonna dry out.

Is-Be's picture

A lot of climate change deniers whistling past the grave yard.

Keep up the good cheer boys.

Faeriedust's picture

Water is Life.

And so Trump and his cronies thought that they could violate the sanctity of Standing Rock and push their black snake through the prayers of millions without any consequences.  Idiots.  You who valued OIL over LIFE can see where starvation gets you.  Maybe.  Since this will be just a little, itty-bitty warning, not real Famine.  Still.  Actions have consequences.  Keep choosing your fancy machines and their illusions of Power Over Nature over the earth who feeds you, and you WILL eventually starve.

Those who are left alive after the wars and the famines will know better.  Think of the Great Dying as an object lesson in who's really in charge down here.

 

Hope Copy's picture

ADM & A.E. Staley Manufacturing Co. just love this as they manufacture the cheap substitutes that make 'cake' four act like hard red wheat.. and some one may sneak in a few boat loads of Russian wheat..  LoL  It is harvest time and whe wheat should be dry on the stalk now..

Hope Copy's picture

ADM & A.E. Staley Manufacturing Co. just love this as they manufacture the cheap substitutes that make 'cake' four act like hard red wheat.. and some one may sneak in a few boat loads of Russian wheat..  LoL  It is harvest time and the wheat should be dry on the stalk now..

this is a late 'play'.. and mostly BS

youshallnotkill's picture

Good thing that global warming is fake news. Would hate to have this happen more often.

dlweld's picture

Yeah, I must say that climate change is certainly the most realistic hoax we've seen in a long, long time.

youshallnotkill's picture

Bastards even get thermometers to display fake temperatures - they are that good.

Crush the cube's picture

This is normal, what's not is the nearly two decades of nice wet growing seasons.  The 70's and 80's we had plenty of dry years far worse than this.  Not everyone will have a complete wipe out, it's like a lottery system, there's those who get a localized shower and a mile away those who don't.  If your farming here and put all your eggs in the bumper crop basket, your a noob and really screwed up.  Too many .gov loan dependent farmers went all in, big mistake, some things never change.

The real disaster is farmers used to be able to stash reserves away for the bad years.  Now it's full retard or bust. 

Crush the cube's picture

Oh, and why mention hogs with a Dakota story?  There's barely any hogs left here, nearly all come in from Canada, they've crushed the local hog farmer.