(Bloomberg) -- Wheat’s not the only crop getting parched as a worsening drought grips northern reaches of the U.S. Great Plains.
The arid region, traditionally known as a wheat heartland, has seen corn and soybean output boom in the past decade as seed technology improved. Ranchers also graze cattle in the area, and it remains a key source of much of the nation’s smaller grain and oilseed crops, such as barley, sunflowers and oats. That means the drought may eventually impact not only the price of a pizza crust, but also the pepperoni on top and the pint of beer on the side.
Almost half of North Dakota has fallen into severe to extreme drought, the worst conditions in four years. The state and its neighbors are home to a more diverse farm landscape than many Midwestern states, with producers often planting five or six crops in a given season, increasing the impact of the dryness on a variety of agriculture markets. Spring wheat futures are heading for a 32 percent gain this month, beating 80 other commodities tracked by Bloomberg. Soybeans and oats are also on the rise.
“It’s a wreck,” said John Weinand, a 58-year-old farmer in Hazen, North Dakota. He’s growing winter wheat, corn, dry peas, sunflowers, malting barley and canola, and the year’s rainfall is as much as 6 inches (15 centimeters) behind normal in his area. The corn “is seriously stressed at the moment and soon going to be hurt beyond repair,” he said.
Spring wheat prices in Minneapolis have soared this month to a three-year high as U.S. crop damage intensified and Canadian farmers planted fewer acres than expected. Oat futures in Chicago have climbed 11 percent in June while soybeans have advanced about 1.5 percent.
While crop problems in the Dakotas haven’t sparked a significant rally for corn or soybeans, it “puts a little more pressure” on the rest of the Midwest to have favorable conditions, said Ted Seifried, chief market strategist at Zaner Group LLC in Chicago. The two states account for about 10 percent of the nation’s corn plantings and 14 percent of soybeans this season, and some other areas, including Indiana, have also had low crop ratings after a soggy spring delayed planting and early growth.
North Dakota’s drought could persist. This year through Wednesday, just under 4.9 inches of rain fell in Bismarck, or about 3.6 inches less than normal, according to the National Weather Service. At the same time, high temperatures have reached 85 degrees Fahrenheit (29 Celsius) or higher a dozen times, including one day when it reached 101. So far, average readings for June are 3.7 degrees above normal.
The state needs about 0.25 inches of rain per day just to make up for what is lost by evaporation and start to blunt the drought, said state climatologist F. Adnan Akyuz. Most of the state’s moisture rises up from the Gulf of Mexico, and those storms wring themselves out before they arrive, Akyuz said. While crops planted early had time to emerge, the period of respite seems to be over, he said.
Some plants have time to rebound. Sunflowers, for example, are sown later than spring wheat and remain in earlier development stages, said John Sandbakken, executive director of the National Sunflower Association in Mandan, North Dakota. The state and its southern neighbor produce the bulk of the domestic crop, which is crushed for oil or eaten as a snack.
“It’s a very forgiving crop when it comes to drought,” Sandbakken said. “It’s still pretty early to know.”
For spring wheat and other small grains, the U.S. may need to rely more heavily on imports from Canada or other nations if crops continue to suffer. Dryness is expanded to expand with temperatures rising to the mid-90s to low 100s Fahrenheit early next week in parts of the region, increasing the area of crop concern to at least two-thirds of Northern Plains wheat and half of Canadian Prairies wheat and canola by mid-July, according to Commodity Weather Group.