Wheat farmers around the world face tough choices when betting on the health of the international wheat market. Following droughts in Eastern Europe and devastating wildfires in Russia, international agricultural markets are facing severe price increases. Fears that Russia will be unable to harvest its 2011 has led to fears of wheat shortages. These fears place US and international wheat farmers in an influential position that will have a significant impact on the price of wheat.
Should farmers seek to take advantage of the price increases they could potentially reap significant profits by increasing their wheat production. However, if they grow too much they could cause a glut on the market, driving prices down.
American farmers appear to be in the process of taking advantage of the temporarily increased prices. Gary Millershaski, who runs a 6,000 acres wheat farm in southwestern Kansas, is planning to increase his wheat production by planting in previously fallow fields, explaining, “I’m an opportunist.” Dean Stoskopf, another Kansas farmer, estimated that wheat production could increase 10%.
The current instability has made it difficult to predict if there will be a wheat shortage or surplus. While Russia has banned wheat exports, their Deputy Prime Minister has hinted that that ban could be reversed in the future. In the face of the potential shortage prices have surged from $4.28 in early July to over $7 last week.
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