With the wheat price at record highs, can farmers plant more wheat or are they already at capacity?
In: 6
Not a farmer, so take this with a grain of salt. But farmers have to take their grain to specific places to sell it. The prices being paid for the product is publicly available. So the farmers harvest their grain, store it in silos, and wait for the price to go up. Then they truck it to the purchase place and unload it. When they are buying, they will buy an “unlimited” amount. You don’t worry about showing up and they say they already have enough. The grain is dumped into these areas prepared for it, but when those areas are full, they just dump it on the ground.
Spring wheat is being planted now in some parts of Texas. As spring continues, the region moves north to the second week in April for the Dakotas.
Farmers can plant more wheat, in the expectation that Russian and Ukrainian wheat exports might be harmed by the war. It’s not at all clear they will, as the people who will be starving are in North Africa and the Middle East, not places known for their ability to spend more for food.
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Midwest Farmer’s Daughter checking in.
Wheat is typically planted in the fall and harvested in late June/early July. Even if they have a free field, there is simply not enough time for them to plant once the ground thaws and harvest by June/July.
It’s not about capacity, but it is about germination and the life cycle of the plant.
That said, many grain elevators will sell contracts. So said farmer could get contracts now that say they will get x amount of dollars per bushel of wheat for x amount of bushels. Similar to buying options in the stock market.
When harvest comes, regardless of what the price of wheat is at the time (higher or lower), their wheat is sold at the contracted price. If they don’t have as many bushels as they contracted, they have to pay the difference.
Is it also accurate that a farmer could have lots of wheat in a silo on their farm that they have been storing until the price goes up. They could bring this into the elevator and get market price (or a contract) as well.
To my knowledge, it is not accurate that excess grain is dumped on the ground. Selling the grain to feed plants and other buyers is how the elevators make profits. Like any business, they want all the $$ they can make and aim not to let money waste on the ground. In the case of my local elevator, they store excess grain offsite on a large pile (the base of which is a circular, steel base). It is covered with a tarp through the winter, then uncovered and trucked to the main elevator once they have space. The grain is then transported via train to businesses that have purchased it from the elevator.
This is true for corn, wheat, beans, oats, etc.
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