Wheat Price Surge Fails to Benefit Kansas Farmers Due to Drought

Kansas wheat growers are facing a paradoxical situation where wheat prices have surged to three-year highs, but they have painfully little grain left to sell due to drought and low yields.

The state's cash wheat price has reached $9.42 per bushel as of September 1, up nearly 59% from a year earlier, according to Kansas Wheat CEO Justin Gilpin. However, the USDA estimates that the Kansas wheat crop will be just 191.4 million bushels, 45% below last year's production.

The drought has forced farmers to abandon about 900,000 planted acres, and harvested fields averaged only 33 bushels per acre, compared with 51 bushels last year. This means that many farmers have fewer bushels available to spread across land costs, machinery, fertilizer, seed, crop insurance, and other expenses required to produce a crop.

The global wheat rally has been driven by disruptions in grain flows from Russia and Ukraine due to attacks affecting ports and cargo vessels in the Black Sea. However, this does not guarantee that foreign buyers will switch to American grain, and USDA has indicated that countries traditionally dependent on Russian and Ukrainian supplies have not yet made a significant pivot toward U.S. wheat.