Wheat fields wilt in drought as parched earth spreads from China to Kansas – ‘I’ve never seen so many problems in so many places’

By Luzi Ann Javier, Madelene Pearson, and Whitney McFerron; William Bi in Beijing, Phoebe Sedgman in Wellington, Chanyaporn Chanjaroen in Singapore, and Tony Dreibus in London; Editors: James Poole, Steve Stroth
6 June 2011 The worst droughts in decades are wilting wheat fields from China to the U.S. to the U.K., overwhelming Russia’s return to grain markets and driving prices to the highest levels since 2008. Parts of China, the biggest grower, had the least rain in a century, some European regions are the driest in 50 years and almost half the winter-wheat crop in the U.S., the largest exporter, is rated poor or worse. Inventory is dropping 8.8 percent, the most in five years, Rabobank International says. Prices will advance 20 percent to as high as $9.25 a bushel by Dec. 31, a Bloomberg survey of 14 analysts and traders shows. Wheat as much as doubled in the past year as crops failed, spurring Ukraine and Russia to curb shipments and increasing the U.S. share of global sales by the most since 2004. Russia ending its export ban on July 1 and Ukraine lifting quotas may not be enough as crops wither elsewhere, fuelling gains in food prices which the United Nations says are already near a record. “In 32 years, I’ve never seen so many problems in so many places,” said Dan Basse, the president of AgResource Co., a farm researcher in Chicago. “We’re concerned about the world story now,” said Basse, who has been studying agricultural markets since 1979 and expects prices as high as $10 this year. … About 80 percent of China’s wheat crop is irrigated, alleviating damage, Dan Manternach, an economist with Doane Advisory Services, an agricultural researcher in St. Louis, said at the end of May. In areas without irrigation, lack of rain in the next three weeks may again threaten yields, he said. “It’s been the driest year in my memory,” said Wang Peijun, 35, a farmer from the east-central province of Henan, China’s biggest growing region. “It’s too inconvenient, too costly to irrigate,” said Wang from Jiaozuo City, who uses the crop to pay for corn seeds planted after the harvest. … “I’ve been farming here for 30 years and it’s the worst I’ve ever seen,” said Robert Law, 53, who cultivates about 5,000 acres of grain in Hertfordshire, England. “The drought has definitely gone on longer than we’ve ever had before.”
The harvest in France, the EU’s largest, will slump 12 percent to a four-year low, according to Agritel, a Paris-based farm adviser. German wheat output will drop as much as 4 percent, according to Hamburg-based Alfred C. Toepfer International GmbH, a grain trader which had previously expected a gain. … The world is in a “long-term upward trend on cost of goods,” Kellogg’s Bryant told investors on a conference call a month ago. “So we would look at 2012 and say, yes, it’s probably going to be inflationary.” … About 44 percent of the U.S. winter-wheat crop was in poor or very poor condition by May 29, the USDA said. Rainfall in the previous two months was less than half of normal in much of Kansas, Oklahoma and Texas, the biggest producers of winter varieties, the National Weather Service estimates. “On these windy days, there’s just dirt in the air and the sky is brown,” said David Cleavinger, 53, who farms 3,500 acres in Wildorado, Texas, and already lost about half of his 1,200 acres of wheat. “Prices are great right now, but you’ve got to grow a crop. If you don’t produce a crop, it doesn’t matter if wheat is $40 a bushel.” …

Wheat Fields Wilt in Drought as Parched Earth Spreads From China to Kansas via The Oil Drum