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Published: Friday, 4/22/2011

Wheat sales grow record profits

BLOOMBERG NEWS
Growers, farm-equipment makers, and seed producers are expected to reap record profits with the rise in wheat prices and U.S. exports. Growers, farm-equipment makers, and seed producers are expected to reap record profits with the rise in wheat prices and U.S. exports.
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BISMARCK, N.D. -- The biggest U.S. wheat shipments in a generation mean record income for farmers, the most profit ever for Deere & Co., and the nation's lowest jobless rate in North Dakota, the largest grower.

The United States will control 28 percent of global wheat exports this year, up from 18 percent in 2010, the U.S. Department of Agriculture says. With prices averaging about $8 a bushel this quarter and the next, the most in three years, farms will earn $94.7 billion, according to analysts' forecasts compiled by Bloomberg and a USDA estimate. North Dakota's jobless rate was 3.6 percent in March, compared with 8.8 percent nationally.

The surge in income is spurring lawmakers to propose farm-subsidy cuts and aiding President Obama in his goal of doubling exports in five years. It also means Deere, the largest farm-equipment maker, will report a 42 percent rise in profit this year, and Monsanto Co., the biggest seed producer, will earn 38 percent more. Shipping lines may benefit the least because the United States is replacing lost supply from Russia and Ukraine, and global exports will drop 8.6 percent in 2011, the USDA says.

"We're the supplier of last resort," said Jerry Fruin, an agricultural economist at the University of Minnesota in St. Paul, specializing in logistics. "The U.S. generally has stuff in the bins, and we have the logistics system to get it to you, since we face both oceans."

Wheat rose 71 percent in the past 12 months to $8.21 a bushel on the Chicago Board of Trade.

U.S. shipments to Egypt, the world's biggest wheat buyer, reached 3.27 million metric tons in the marketing year that began in June, seven times more than a year earlier, USDA data show. Jordan, Lebanon, Saudi Arabia, Oman, Libya, and Syria have purchased United States wheat this year, after buying none at the same time last year, the data show.

Buyers in the Middle East and northern Africa accelerated purchases this year to bolster stockpiles and damp prices that contributed to protests across the region.

The United States will ship 34.7 million tons of wheat in the crop year ending May 31, compared with almost 24 million tons a year earlier and the most since 1993, USDA estimates show.

Agriculture accounted for 8.3 percent of North Dakota's economy in 2009, more than any other state, the most recent government data show. Agriculture employs more than 29,000 people, compared with about 7,000 in natural resources such as oil and gas production, according to the state Commerce Department.

Wheat generated almost $7 billion for North Dakota last year, said Erica Olson, a marketing specialist with the North Dakota Wheat Commission in Bismarck. About half the state's wheat crop is exported.

Cargill, the Minneapolis grain exporter that's the largest closely held U.S. company, reported a 30 percent jump in third-quarter profit April 13.

Deere, in Moline, Ill., will report record earnings of $6.21 a share in its fiscal year ending in October, compared with $4.35 a year earlier, according to analysts' estimates compiled by Bloomberg. Monsanto, in St. Louis, will make $2.83 a share in the year ending in August, up from $2.01, estimates shows.



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