The war in Ukraine has sent wheat prices skyrocketing.
The Chicago Board of Trade sets the market price for Michigan wheat and is based on global supply and demand. Russia and Ukraine produce one quarter of the world’s wheat.
"We've never had wheat prices as high as they've been since this Russia, Ukraine incident," said Dennis Pennington, a wheat specialist with Michigan State University Extension.
But just because Michigan wheat producers will bring in more money does not mean they will make more money—quite the opposite. Pennington said planting and production costs are hitting record highs and farmers are worried about the market.
Michigan’s wheat harvest doesn’t happen until July, and that gives the market plenty of time to swing one way or the other.
“What happens if the market drops out, and I can't get that higher price," said Pennington. "If that that price goes away, I could be in big trouble in a real big hurry. And then the other worry is access to the inputs. Is there enough fertilizer available?”
Since Russia's invasion of Ukraine, the U.S. Department of Agriculture has been discussing ways to help curb a potential global wheat shortage in the middle east and north Africa.
However, Pennington said that is going to be challenging because the last four years of wheat production have been some of the lowest in terms of acreage since the early 1900s.
Pennington said there are so many unknowns for wheat producers and the opportunity for entering markets that Russia and Ukraine fill will depend on the state of the war and Ukraine's infrastructure.
"How much of the wheat got destroyed, how much of it? Are they going to actually be able to harvest and what kind of yield are they going to get? Do they have the infrastructure to put it on rail cars and in barges and get it out of the country for shipments?," said Pennington.
Pennington said in his 30-year career he’s never seen markets and pricing like this
"I've never seen this much disruptions in our normal supply chain and supply system at any one time. You'll see them here and there, but nothing to the extent that what we're seeing today."