The Associated Press
Food Manufacturing – October 13, 2008
BILLINGS, Mont. (AP) – Agricultural industry experts say some of the recent dramatic drop in crop prices is a result of money troubles in the United States and around the world.
Lola Raska, executive vice president of the Montana Grain Growers, said a better-than-expected global wheat crop and a number of speculators leaving the grain futures market are combining to depress prices. "It's pretty scary going into the winter months to see prices drop," said Raska.
Some pulling out began about a month ago – before Congress started talking about a $700 billion bailout for struggling financial institutions, according to Jerry Cope, a wheat marketer for South Dakota Wheat Growers of Aberdeen.
Another factor is the rising value of the dollar, said Dave Bauschena, an agricultural economist at Montana State University in Bozeman. "The main story is the strength of the dollar, which was getting stronger throughout August," Bauschena said. "And the U.S. Department of Agriculture was warning that wheat production worldwide was going to be up."
Globally, the projected wheat production was 676 million tons in August, which was 5.5 million tons greater than what was expected in July. Last week, cash grain prices for ordinary winter wheat fell to as low as $4.56 a bushel, roughly two-thirds the price local grain elevators were willing to pay in August.