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High Prices

Wheat prices are ta historic highs, yet Oklahoma farmers are taking this good news with a measure of caution.
High Prices

Wheat

Show Dates

Show 0808: High Prices

Air date: February 24, 2008

 

Transcript

Rob:  Wheat prices are at historic highs.  Yet Oklahoma farmers are taking the good news with a measure of caution.

Keith Kisling:  I sold some wheat the other day for 10.90, and I’m going to frame it.

Rob:  Like wheat farmers across the nation, Oklahoma’s Keith Kisling is enjoying the recent rise in wheat prices; tight, worldwide supplies, combined with increased demand, is pushing prices to record highs.

Kisling:  I think you could talk to any farmer that is 80 years old, and he’d say these prices are unbelievable.  And to sit here and not get a little bit of that would be a little ridiculous.

Rob:  To do that, farmers use something in the futures market called forward contracts to lock in prices.

Kisling:  I think you’re seeing a lot of people in ’08 contract wheat; I think you’ll see some in ’09 and ’10 wheat being contracted, because, you know, there’s a time when we could get $8 for ’10 wheat.

Rob:  But there is a catch.  With locked in prices, there’s also locked in delivery come harvest time.

Keith Kisling:  The risk is not raising it, and that happened to me this last year.  I had contracted wheat for ’07, and didn’t raise a bushel of wheat.  We did not cut one bushel of wheat.  So, I had to write a check for the difference, and that was pretty expensive.  So, there’s a pretty big risk.  You have to deliver the wheat that you contract, and if you don’t raise it, you have to pay the difference in that wheat.

Rob:  Making this year’s wheat harvest, possibly the most profitable, yet also the most volatile, Oklahoma wheat growers have ever seen.