Decision Time Looms for Wheat Far

Decision Time Looms for Wheat Farmers

Liam Pleven, Nour Malsa, and Patrick Barga, Wall Street Journal, August 9, 1010

Wheat farmers in the U.S. and elsewhere are gearing up to make a crucial bet on the health of the world's grain supplies.

Many farmers must decide within the next few weeks whether to plant more wheat to take advantage of rising prices triggered by the crippling drought in Russia and the nation's export ban.

At the same time, Russian farmers are facing a rapidly closing window. The fate of their 2011 crop rests on whether rain finally falls in time for new plantings to take hold.

The weather and decisions made by farmers throughout the world will have ramifications for the price of wheat and many other commodities. Worries about a shortage already have sent grain prices soaring, threatening a potentially damaging bout of food inflation. But if waves of farmers decide to plant added wheat to take advantage of that threat—and if next year's Russian crop is strong—the balance could quickly tip to a glut, driving prices down and hurting rural economies.

On Monday, an Australian commission warned that a hatching of a huge locust plague with the potential to devastate winter crops, including wheat, in eastern Australia could start as early as next week. Australia usually is a major global supplier of wheat and barley.

Egypt, the world's top importer, said over the weekend that the recent rise in prices could cost it an additional four billion Egyptian pounds, or about $705 million. Cairo also moved to secure other supplies after Russia imposed an export ban, buying 240,000 tons from France on Saturday.

Indonesia, Thailand and other nations already face higher costs for various food items, including sugar and pork, heightening concerns about a return of the civil unrest that accompanied rising food costs in 2008.

Much depends on decisions made by farmers such as Gary Millershaski, who has a 6,000-acre farm in southwestern Kansas, typically the...