Mid-South farmers are finding for the second straight year that just because Chicago wheat futures are at record highs doesn't mean prices at their local grain elevators will be at those levels.
Growers in Arkansas and Missouri are reporting cash offers from $1.50 to $2.50 per bushel below Chicago soft red winter wheat futures as they begin to deliver new crop wheat to their local elevators. Last year's harvest basis widened to about $1 per bushel in the Mid-South.
Couple those low prices with the absence of a wheat marketing loan because of delays in passing the new farm bill and wheat growers are experiencing a bitter end to what began as a growing season full of promise. (Chicago wheat futures briefly rose above $12 per bushel at one point in March.)
Noting that farmers in southeast Missouri were just beginning their wheat harvest, Rep. Jo Ann Emerson, R-Mo., asked Agriculture Secretary Ed Schafer to expedite the writing of the regulations for the wheat marketing loan authorized in the 2008 farm bill. Rep. Marion Berry, D-Ark., also signed a letter sent by Emerson to Schafer.
“Wheat farmers are starting their harvests as soon as tomorrow in southern Missouri, and they face a unique set of circumstances,” Emerson said in the letter dated June 5.
“Due to the delay in finalizing a new farm bill, these producers and their crops are essentially unprotected at a time of extraordinary negative basis.”
With the anticipated size of this year's wheat crop and the rising cost of farm inputs, many farmers will be forced to make sales as their wheat leaves the farm, Emerson noted. “Even at a time of rising retail food prices, American farmers clearly need the support of the Marketing Assistance Loan Program to help offset the tremendous risks they face.”
One farmer from Keo in central Arkansas said the basis at his local elevator had widened to $2.50 a bushel. The increase in the basis dropped the cash price of the wheat to about $5 per bushel when he delivered the wheat on June 4.
“They said it's because of problems at the Gulf (of Mexico),” he said. “I don't know what the explanation is but I know a lot of growers will be disappointed when they begin trucking wheat to the elevator.”
In her letter to Schafer, Emerson noted that the basis at the Gulf is now as much as $1.75 below the futures prices on the Chicago Board of Trade and reportedly increases as elevators further up the Mississippi River.
The Marketing Assistance Loan Program was recently reauthorized for wheat and other program crops in the Food, Conservation, and Energy Act of 2008. USDA officials have said they will prepare the regulations for the new law as quickly as possible.
“We would respectfully request that the Department make every effort to expedite the regulations necessary to provide this important tool to producers currently harvesting or about to harvest their crops,” she said.