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Wheat farmers enjoy best prices in 10 years
Wheat prices are near 10-year highs as local growers finish the harvest, but many farmers are still figuring out what kind of returns they will reap.

Weeks of rain in the spring, followed by 100-degree temperatures when the wheat kernels were filling out, led to a highly variable crop. With about 60 percent of the harvest complete in the Sacramento Valley, it appears yields were reduced by about one-third, said John Gilbert, field representative for Adams Grain Co. Inc. in Arbuckle.

"The price is up, but I don't even know how many loads we've taken out of the field yet," said Walt Davey, owner of Davey Farms in Dixon, which finished harvesting 400 acres of wheat last week.

Wheat is not a major breadwinner in the Sacramento region compared to processing tomatoes, rice or alfalfa. But it's frequently grown in the winter as a rotation crop for higher-value tomatoes, Yolo County's highest-grossing agricultural crop.

Yolo was the state's fourth-largest wheat-producing county in 2005. The annual production value of wheat in the county has ranged between $8.5 million and $16.2 million over the past few years.

The California wheat crop is projected to be 29 percent smaller this year than last, according to the U.S. Department of Agriculture. Nationwide, winter-wheat production dropped 16 percent this year, partly because of drought in the Great Plains. Oklahoma's crop is forecast to be the smallest since 1957.

The USDA expects world wheat supplies will dip to a 25-year low in the coming year.

The smaller supply has forged a sellers' market.

Wheat futures in May traded at record levels and 60 percent above the trading volume in May 2005, according to the Kansas City Board of Trade. California wheat growers reported wheat futures trading in May at a decade-high $5.22 per bushel.

USDA forecasts put the average farm price of wheat at $3.60 to $4.20 per bushel in the coming year, up from $3.42 for the crop harvested before June 30.

"We are seeing good, strong prices we haven't seen in the last few years," Gilbert said.

Higher prices don't translate directly into higher profits because farmers are paying high fuel and labor costs, and because many farmers sell contracts for their wheat before it is harvested, with not all benefiting from the recent price increases.

"There's not much left to sell," Gilbert said. "Going into the 2007 crop we're seeing nice, high prices. So growers are starting to sell next year's crop even though it hasn't been planted yet."

Demand for California wheat has increased since Mexico reopened its borders to wheat imports from the region. Mexico had banned the trade since 1996 due to concerns about the spread of a fungal disease.

High prices mean fewer government handouts. The USDA hands out "loan-deficiency payments" (LDP) to make up the difference between farm loan rates and crop prices.

"Someone who's growing wheat this year won't get the LDP," said Marianne Morton, executive director of the Yolo County office of the USDA Farm Service Agency. "All of our price supports are designed to keep farmers in business when prices are bad."

The price spike could induce growers to boost the amount of land they devote to the crop. But farmers playing catch-up from the crazy spring weather haven't thought that far ahead.

"If the price goes up more, we probably will plant more," Davey said. "We just haven't figured it out yet."
MGR Archive 11.7.2006
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Russia Rapan $ 700
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