Wet weather in U.S. increases grain prices, mycotoxin risk

Storm-Over-Field_BlogLarge areas of the United States’ crop-growing regions have received more than six times their annual rainfall in the past two weeks. This is sending grain and soybean prices skyward as field work stalls and concerns about the crops continue to grow. In addition, the worst may not be over just yet, as reports from the National Weather Service predict more wet weather on the way.

The unexpected price surge, including a 15% run over the past week, comes after wheat prices hit five-year lows in May, when ample global supplies and lackluster export demand for U.S. wheat depressed the crop’s value, a recent article states.

The wet weather is stalling the harvest of soft red winter wheat, which is grown mostly in states that flank the Mississippi River and is used to make pastries and snacks. Growers harvest the wheat mostly in June, but muddy soil this month has made it hard for many farmers to operate their harvesting combines, and prevents the crops from drying properly before removal.

The excess moisture on crops also holds another problem as it can lead to crop disease, which reduces crop quality. For example, the article states farmers are already reporting high incidences of vomitoxin (DON), a toxin that results from a fungal disease that develops in wet conditions.  DON causes health concerns for both animals and humans and can result in economic losses due to rejected crop.

“This is something we didn’t see coming a couple of weeks ago,” Terry Reilly, an analyst, said in the article. Wheat really whiplashed after eight inches of rain was dumped across fields in central Iowa and northeastern Missouri.  Upward of two inches of precipitation also hit parts of Illinois, Indiana and the Ohio River Valley, he added.

Approximately 19% percent of the nation’s winter wheat crop was harvested as of Sunday, according to a weekly progress report released by the U.S. Department of Agriculture. That figure is well behind of the average five-year pace of 31% for the same period. In Illinois, for example, only 3% of the wheat crop had been collected, compared with the average 29% for the previous five years.

Dave Eidman, an Illinois farmer who grows wheat and other crops, said his fields are so muddy he has only been able to work about one out of every 10 days, adding that heavy rains also wash starch out of the wheat, lowering its quality, or test weight.

“You lose test weight, you lose dollars. You get vomitoxin, you lose dollars,” Eidman said in the article. He also noted that due to recent flooding, some of his wheat has been devalued by as much as $2 a bushel.

Higher wheat prices aren’t yet likely to result in a noticeable jump in grocery-store prices, the article states. However, adverse weather —from the far reaching effects of El Niño—is also causing wheat prices to increase elsewhere in the world as heat and dry conditions are threatening crops in Canada, France and Australia.

Meanwhile, the slow pace of the U.S. wheat harvest also has boosted prices for soybeans, which many growers in the eastern Midwest plant on the same acres after wheat crops have been collected.

“The weather has been anything but normal,” Dave Marshall, a farm-marketing adviser said in the article. “There’s a re-evaluation going on. Where it finally ends up we’ll have to wait and see.”

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