Declining wheat prices affect farmers who didn’t lock in value

Sagging prices for Oklahoma’s top crop lead this edition of Futures File, our weekly commodities wrap-up.

Wheat slices lower

Chicago wheat prices collapsed below $3.85 per bushel this week, the lowest level in almost a decade. Prices are falling after a bountiful U.S. wheat harvest adds to a record-high global grain stockpile.

For many farmers, the value of their wheat is far lower than the price traded in the Chicago futures markets. Due to oversupply in local markets, some farmers are being paid under $3 per bushel for wheat, a ruinous price for those farmers who didn’t lock in higher prices earlier this year.

Housing hoists lumber higher

Sales of new homes exploded last month to the highest level since 2007. The U.S. Census Bureau estimated that a seasonally adjusted 654,000 new homes sold in July, a jump of more than 30 percent in the last year.

More active homebuyers have begun cutting into the inventories for existing homes, pushing prices higher across the board and incentivizing construction crews to hammer out more new homes to meet demand.

This wave of construction has helped to boost lumber prices, which are up by more than a third over the last year, trading Friday for $319 per thousand board feet.

Timber could see a further boost if a trade dispute between the U.S. and Canada isn’t resolved soon. Canada is the world’s largest exporter, and U.S. homebuilders have been increasingly sourcing Canadian lumber, but trade could be restricted by import quotas or tariffs, which would hoist prices higher.

Natural gas rises

Prices for natural gas have risen for five consecutive trading days, gaining more than 10 percent in just a week. Gas is gaining as weather watchers expect more demand and see supply threats looming.

Unusually hot temperatures are increasing demand for electricity to run air conditioning, and, in turn, natural gas-fueled power plants.

Meanwhile, a storm is brewing in the Caribbean that could knock out energy production in the Gulf of Mexico. The storm’s track is uncertain, but some meteorologists are warning that the storm has potential to develop into a hurricane that would make landfall on U.S. shores.

As of midday Friday, September natural gas was trading for $2.88 per million British thermal units.

Oklahoma wheat farmers reaped a bountiful harvest this year, but so did farmers elsewhere, which has helped drive prices lower. Chicago wheat prices fell to a 10-year low last week, and some farmers are getting even less locally for their crop.