KGOU

Low Wheat Prices Leave A Gluten Glut At Midwest's Grain Elevators

Aug 13, 2015
Originally published on August 13, 2015 10:01 pm

The sun hasn't been up long in Kingfisher, Okla., but it already feels like it's burning. Trucks are moving wheat as people try to get their work done early. It looks like business as usual for a hot summer day an hour northwest of Oklahoma City.

Henry Senn, Jim Willms and Bill Stolz come to CHS Plains Partners, the local grain elevator, just about every day to share stories from the good old days and talk about wheat prices.

They harvested their wheat in early June, but with spring floods, the quality of the wheat wasn't good. That's one of the factors driving down prices and keeping the grain elevators at capacity.

Right, now, the price for a bushel of wheat is slumping to just over $5, the lowest it's been in five years, and that costs these farmers a lot of money — as much as $20,000 or $30,000 for an average grower, Senn says.

"Three years ago, the average wheat price in the United States was $7.70 a bushel, and it cost about $4.75 to produce it. There was a lot of profit," says Oklahoma State University professor Kim Anderson, who helps farmers figure out when to sell their wheat. "You could make a lot of money raising wheat, and so farmers raised wheat."

So, over the past several years, supply on the world market has been steadily increasing, but demand hasn't been.

And that's not the only factor. The value of the dollar is up, making it more expensive for overseas customers to buy American wheat. Jay Minton manages several grain elevators for Plains Partners in Oklahoma.

Jay Minton, who manages several grain elevators in the area for Plains Partners, says about a third of the 2015 harvest there has been sold.

In the Kingfisher elevator, Senn absently drums his fingers on the folding table as coffee time nears an end. He and his friends say they have extra income from oil and gas wells, so Senn says they haven't sold any of their 2015 crop.

"Not a bit. You probably haven't either? You haven't either," he says. "We're hoping, surely, it'll make a little spurt before the first of the year. Usually does."

Whether the wheat price rallies or not, these men are off to work. Today, they're spraying weeds and preparing the ground for next year's crop. Planting starts in less than six weeks.

Copyright 2015 KOSU-FM. To see more, visit http://www.kosu.org.

Transcript

RENEE MONTAGNE, HOST:

Grain elevators are the skyscrapers of the Great Plains. Dotting the countryside where the highway and railroad meet, these tall, white, concrete towers serve as local business hubs. They are the storage and trading points for wheat after it's harvested, and right now they're full because of low prices. Rachel Hubbard of member station KOSU reports.

RACHEL HUBBARD, BYLINE: The sun hasn't been up long in Kingfisher, Okla., but it already feels like it's burning. Trucks are moving wheat as people try to get their work done early. It looks like business as usual for a hot summer day in the northwest part of this state. Wheat farmers in the area stop for a cup of coffee at CHS Plains Partners, the local grain elevator.

HENRY SENN: Here comes old Willms.

BILL STOLZ: Yeah.

SENN: But hell, he can't hear.

STOLZ: (Laughter).

SENN: He could tell you some stories.

STOLZ: Yeah.

HUBBARD: Henry Senn, Jim Willms and Bill Stolz come here just about every day to share stories from the good old days and talk about wheat prices. They harvested their wheat in early June, but with spring floods, the quality of the wheat this year wasn't good. That's one of the factors driving down prices. Right now, the price for a bushel of wheat is slumping to just over $5, the lowest it's been in five years. And for these farmers, that's a lot of money.

JIM WILLMS: Average guy would probably have raised 15 to 20,000 bushels...

STOLZ: Yeah.

WILLMS: ...I'd say.

SENN: So you take off a dollar and something a bushel...

STOLZ: Yeah, yeah, oh, yeah.

SENN: ...It's $20,000, $30,000. It's went down of what you could have had. It's a guessing game.

HUBBARD: While the wheat prices are a high-stakes guessing game for farmers, economists say there are patterns. Kim Anderson is the crop marketing specialist for Oklahoma State University. He helps farmers figure out when to sell their wheat. Right now, farmers are in the down part of the cycle involving supply and demand.

KIM ANDERSON: Three years ago, the average wheat price in the United States was $7.70 cents a bushel, and it cost about $4.75 cents to produce it. There was a lot of profit. You could make a lot of money raising wheat, and so farmers raised wheat.

HUBBARD: So over the past several years, supply on the world market has been steadily increasing, but demand hasn't been. And that's not the only factor. The value of the dollar is up, making it more expensive for overseas customers to buy American wheat. Jay Minton manages several grain elevators for Plains Partners in Oklahoma.

JAY MINTON: Commodity prices have been on a downturn, but the amount of grain or producer grain that we carried longer has continued to increase.

HUBBARD: Minton says in his area, about one-third of the 2015 harvest has already been sold. Senn absently drums his fingers on the folding table as coffee time nears an end. He and his friends have extra income from oil and gas wells, so they haven't sold any of their 2015 crop.

SENN: Not a bit. Yeah, you probably haven't either. You haven't either.

WILLMS: No, you're just hoping it'll go back up.

SENN: Yeah, we're hoping, surely. It'll make a little spurt before the first of the year, won't it? Usually does.

WILLMS: Yeah, yeah.

HUBBARD: Whether the wheat price rallies or not, these men are off to work. Today, they're spraying weeds and preparing the ground for next year's crop. Planting starts in less than six weeks. For NPR News, I'm Rachel Hubbard in Oklahoma City. Transcript provided by NPR, Copyright NPR.