Low wheat yields and prices are hurting Oklahoma farmers, but they’re hurting grain elevators even more.
Oklahoma is seeing its lowest wheat yield since 1957. And despite the short supply, prices are hovering at the five-year average — about $6.50 per bushel.
Grain elevators buy wheat and other grains from farmers for storage and later sale.
Farmers have a measure of protection during hard times, said Kim Anderson, an agricultural economics professor at Oklahoma State University. They can buy crop insurance from the government. Many do. On average, the insurance covers about 70 percent of the loss.
But grain elevators can’t get insurance. They just have to take the loss.
“They’re taking the full brunt of this short crop,” Anderson said.
Vincent Smith, manager at Farmers Cooperative Exchange, said that the past few years have been hard on his grain elevator business, but this one has been the worst.
Smith said his operation saw about 23 percent of the usual crop size.
“Maybe we’ll get some fall crops,” he said.
Products that get harvested later in the year, like corn and beans, can alleviate the damage. But nothing can fix the wheat harvest’s disappointment.
Estimates for this year’s wheat harvest put Oklahoma’s producers at 51 million bushels, Anderson said. The five-year average yield is more than 105 million bushels.
But prices are hovering around average instead of rising because of short supply.
They were higher than average in the spring, but have dropped from more than $8 per bushel down to about $6.50 per bushel, said Lane Broadbent, president of KIS Futures, a commodities trading firm.
High and dry
The combination is leaving farmers and grain elevators high and dry. Not only are they having to sell smaller amounts of wheat, but they are being paid less for it.
“That’s what makes this market so disheartening,” Broadbent said.
The price problem doesn’t come from Oklahoma. It comes from the European Union, the Ukraine and Australia, said Mike Shulte, Oklahoma Wheat Commission’s executive director.
“Worldwide, we’ve had adequate wheat supplies,” he said.
This year, Oklahoma saw its lowest wheat production since 1957, Schulte said. But this year also was the world’s second-most productive year on record for wheat. The most productive year was 2013.