Wheat is trading at record highs

The grass that helped create Minnesota became the crop that roared this week.

Wheat, which once upon a time drew farmers to the region and grain traders to St. Anthony Falls, traded at record highs at the Minneapolis Grain Exchange as forecasts for the world's supply grew dim.

Blame the weather. Farmers in major wheat markets around the globe were hit with drought or too much rain, wiping out supplies. Wheat futures for December delivery closed at $7.5975 per bushel on Thursday, about double the price of a bushel of wheat two years ago.

Prices were even higher Wednesday, when a bushel for December delivery closed at $7.715, the highest wheat price ever recorded at the exchange.

The price rose so quickly this week -- twice hitting the exchange's 30 cents per day price fluctuation limit -- that farmers couldn't sell crops, said David Torgerson, executive director, Minnesota Association of Wheat Growers. "Nobody would buy futures at that price," he said.

The dramatic swings were compounded by tight supplies worldwide. The demand for ethanol and higher prices for soybeans and corn has had farmers abandoning wheat for several years now, Torgerson added, further dwindling supplies.

Consumers can expect to pay more for all of the things that use wheat, but not that much more.

A 1-pound loaf of bread uses 10 cents of wheat at today's prices, according to Torgerson. Two years ago, when wheat traded closer to $3.50 a bushel, a consumer paid 5 cents less for the same loaf.

Food prices are already under pressure because of higher energy costs and the high price of corn, which closed Thursday at $3.3925 per bushel in trading at the Chicago Board of Trade.

Many of the state's farmers contract their wheat crops a year ahead of time, so they won't sell their crops at today's record high price. Still, profits are high, Torgerson said.

No one's expecting the price to stay this high for long, said Ed Usset, a grain marketing specialist at the University of Minnesota.

"The good news is that wheat markets can react quicker than most. Wheat's grown all over the world."

Bearing him out, wheat futures for delivery next summer were less expensive, with the assumption being that more wheat will come on the market by then.

Matt McKinney • 612-673-7329

Matt McKinney • mckinney@startribune.com