Supply Chain: #Wheat

Up-front: Drought conditions could lead to a disruption of baking wheats; Kansas, the 5th largest global exporter of such wheats, is seeing farmers chemically kill their crops.

Hard "red spring" and hard "red winter" baking wheats in the U.S. have been impacted by an "extreme drought". The USDA's recent (as of April 2023) national seeding scorecard reported that 75% of wheat crops in the Central and Southern Plains region were under drought conditions. Montana, Kansas, Texas, Colorado, South Dakota, and Nebraska were scored under the most "severe" drought level. In Kansas, 19% of baking wheat crops are being destroyed voluntarily by farmers by chemical or grazing reassignment (farmers discard the yield losses and turn to insurance to make up for losses). Of the 37+ million acres of wheat crops, only 25+ million are able to yield positive harvests. Some agricultural analyst have projected "wide-scale supply chain shortages and price gouging".

Assessment: While many prices in grocery stores are leveling out, wheat may be the next shelved food to see a disruption and price increase. Major harvesting of baking wheats are estimated to begin in early July; if drought conditions improve and crops can be salvaged (at least those that are not already destroyed); there remains a possibility that the impact will be minimal.

》Sources: https://www.wsj.com/livecoverage/stock-market-today-dow-jones-05-12-2023/card/farmers-are-abandoning-scorched-wheat-fields-in-droves-Rp0NZKQmpiS8c9FDcODL | https://www.ers.usda.gov/webdocs/outlooks/106319/whs-23d.pdf?v=7139.9 | https://www.reuters.com/markets/commodities/kansas-farmers-abandon-wheat-fields-after-extreme-drought-2023-05-22/ | https://www.tastingtable.com/1266571/extreme-drought-us-flour-prices/