Wheat is the new gold in time of plenty for America’s breadbasket

As fires wreck Russia's harvests and poor countries brace for shortages, it's boom time for Kansas farmers.

Wildfires, floods, crippling droughts, and even a threatened plague of locusts have wrecked crops and ruined harvests around the world, raising fears of global food inflation shortage and food riots.

But as they hose off the dust and chaff caked on their exhausted combine harvesters, farmers in America's plain states are adjusting to something possibly wonderful: a combination of unusually good wheat yields and suddenly soaring prices – thanks to disastrous circumstances elsewhere – has put them at the centre of a gold rush.

"It feels like Christmas in August," admitted Darrell Hanavan, of the Colorado Wheat Administrative Committee, noting that the harvest just completed in his state seems to have been the most bountiful for 25 years. More importantly, the dollar value for the crop is almost sure to set a record.

The thin soil of the plains is not always so kind. Scorching drought and relentless rains are frequent visitors to the breadbasket of America. So it is startling for some to find themselves singled out for good fortune, while the rest of the US combats an unemployment rate that refuses to come down.

Russia announced that weeks of fierce heat and uncontrolled fires would cost the country a quarter of its crop and that its wheat exports, which will be frozen from tomorrow, may not resume until next year. Output in Ukraine and Kazakhstan has slumped too. Canadian wheat farmers have been struggling with crops drowned by rains that won't stop, and in eastern Australia, the wheat crop could be devastated by a plague of locusts expected to start hatching next week.

Egypt, the world's biggest wheat importer, and Indonesia and Thailand, which also both rely on imports of grain, complained this week that they face a sudden price squeeze on such staples as bread, pork and sugar and with that, the risk of social unrest of the kind witnessed in 2008, when food price hikes provoked riots in a number of countries.

Abdolreza Abbassian, a senior economist with the UN's Food and Agriculture Organisation (FAO) in Rome, said Morocco, Libya, Tunisia and Iran all face higher budget deficits because of the amounts they spend on bread subsidies. "Some are politically unstable countries – they simply cannot afford" the social effects that bread queues could have on the urban poor.

Whether the risk abates could depend on farmers in the American Midwest and whether they decide to cash in by planting more wheat, the world's most consumed cereal. The rosy outlook for them was confirmed by the US Department of Agriculture (USDA). It expects US exports to surge by 36 per cent this year.

"Crop revenues look to be much improved, with record crops and generally higher prices than we anticipated earlier this year," Joseph Glauber, the USDA's chief economist said.

"The US is an island of supply in a year of very big demand," noted Daniel W Basse of AgResource, a Chicago commodity-forecasting concern. The US Agriculture Secretary, Tom Vilsack, added: "There is no question this is an opportunity for us and we're going to take advantage of it."

Farmers everywhere are notoriously slow to pop the champagne, however. Even now, some, such as Daryl Larson, who farms 1,500 acres in Kansas with his brother, can't entirely shed their natural caution. "I guess maybe farming makes that happen to you," he suggests with a chuckle. "Nothing is for certain."

He knows, for instance, that while the futures prices of wheat on the Chicago commodities exchanges are spiking at heights that even a few weeks ago would have seemed mad –above $7 (£4.50) a bushel in recent days – the cash he receives from selling now is considerably more modest.

Moreover, it is no secret to Mr Larson that speculators who have rushed to buy wheat in the wake of Russia's export ban may have created a bubble that is not immune from bursting. After finishing his harvest in June, Mr Larson, 56, sold nearly half of his wheat crop but will keep the rest in the silo in the expectation that the prices will at least climb further if not astronomically. "I am expecting the export business will pick up in the next few weeks because the rest of the world does not have a whole lot of wheat to export. If that is correct, we should see new strength in our exports."

Most analysts would concur with Mr Larson's strategy of holding on to some grain for added profit but not expecting the world. American farmers will, more than likely, increase their wheat acreages when planting time comes in the next few weeks.

"It's hard for me to imagine that we won't see some increase in wheat acreage," said John Anderson, an economist with the American Farm Bureau Federation. "Wheat prices are certainly at a level historically that would look very attractive." The pressure put on pricing by the speculators could, of course, always backfire on them. But for now at least, the upwards pressure on wheat prices is rubbing off nicely on other crops grown in the US.

Mr Larson is preparing to harvest his fields of soy bean and sorghum, crops for which the market has also been strengthening. Because wheat is also produced in parts of the world, for instance the Ukraine, for cattle feed, a similar effect is being felt for another crop that is huge in US: corn (or what the British call maize).

So surely this is one of those unusual times when farmers in the US at least can afford to admit to some joy. Did Mr Larson at least skip a little when he saw the news about Russia moving to suspend exports of wheat? Mr Larson, who has been working his farm since the day he graduated from high school in 1972, wouldn't say that exactly, but it did cheer him. "We've had better. And we have a lot worse."

Suggested Topics
News
people
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Sport
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
Sport
Esteban Cambiasso makes it 3-3
premier league
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
News
people'I hated him during those times'
News
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
News
i100
News
Dame Vivienne Westwood has been raging pretty much all of her life
peopleFirst memoir extracts show she 'felt pressured' into going out with the Sex Pistols manager
Arts and Entertainment
Lauryn Hill performing at the O2 Brixton Academy last night
musicSinger was more than 90 minutes late
Sport
Lewis Hamilton in action during the Singapore Grand Prix
Formula OneNico Rosberg retires after 14 laps
News
i100
News
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Arts and Entertainment
tvReview: 'Time Heist' sees a darker side to Peter Capaldi's Doctor
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Head of Marketing and Communications - London - up to £80,000

£70000 - £80000 per annum: Ashdown Group: Group Head of Marketing and Communic...

Nursery Nurse

Negotiable: Randstad Education Manchester: Level 3 Nursery Nurse required for ...

Nursery Nurse

Negotiable: Randstad Education Manchester: L3 Nursery Nurses urgently required...

SEN Teaching Assistant

Negotiable: Randstad Education Manchester: We have a number of schools based S...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam