Decades from now, farmers will still talk about this week - the moment when wheat in Minneapolis soared to nearly $20 a bushel.

Like a 100-year flood, spring wheat prices have risen relentlessly all winter, obliterating every record in sight. At the Minneapolis Grain Exchange, wheat fever pushed prices to $19.80 a bushel in trading Friday - nearly triple the record from 1996.

Mark Wilson, his arms raised, and Richard Diaz, in the yellow jacket, join other traders Friday morning to trade hard red spring wheat futures at the Minneapolis Grain Exchange. In a bullish week for farmers, wheat prices defied the exchange's trading limits to reach almost $20 a bushel. (JEAN PIERI, Pioneer Press)

To grain experts, it's a warning of what happens when grain supplies don't keep up with rising demand. Fear of scarcity and shortage push markets far beyond any norm.

"This wheat market has given us a glimpse of the what-if - what if we don't deliver the goods on the production side, because the demand is here," warned Ed Usset, a grain marketing specialist at the University of Minnesota.

For the past month, the hottest market in the nation has been the Minneapolis Grain Exchange, the nation's center for trading spring wheat futures. The high-protein wheat that farmers grow in Minnesota and the Dakotas is prized for making bread, but poor crops worldwide have left wheat supplies at a 60-year low.

The impact of that shortage reaches far beyond the wheat trading pit in Minneapolis. Trading in Minneapolis has supercharged wheat markets in Chicago and Kansas City, Mo., as well. That has pushed corn and soybean prices to near-record levels - fueling a wave of uncertainty about everything from food price inflation to subsidies in the new farm bill to hunger in the developing world.

"Minneapolis, that's where this is all coming from, the shortage of the actual physical supply of spring wheat and durum," said Elaine Kub, a commodity market analyst at DTN. She suspects grain prices elsewhere will retreat, but there's little question about the clamor for spring wheat.

"People are desperate," Kub said. "You definitely heard stories from out in the country of elevators offering $20 a bushel and getting no sellers. ... You hear people tossing around the words 'wheat hoarding.' "

For decades, agriculture's great problem has been surplus, not scarcity. And ruinously low prices, not ruinously high ones. Farmers have complained bitterly about this, but consumers benefitted from the great abundance of grains and proteins. This week's action in Minneapolis previews a different sort of marketplace.

"It's telling us how close we are to that tipping point in all commodities," said Usset, a former grain trader. "Every commodity I know would like more acres: corn needs more, soybeans need more ... durum wheat, malt barley, sunflowers, they all want a little more production."

The Minneapolis Grain Exchange itself is scrambling to adjust to the explosive markets. On Friday, the maximum daily trading limit rose to $1.35 a bushel - compared with 30 cents last week - and soon, the maximum daily limit will vanish. Officials suggested they had little choice. Markets were so volatile that they locked up day after day, so nobody could trade wheat futures at all.

"Whenever you have set caps, even if they're for good intentions to help protect certain people from abnormal price swings, you're going to run into others who are affected because you have those price caps," said Layne Carlson, treasurer of the Minneapolis Grain Exchange.

On Friday, for the first time in 12 trading sessions, the March wheat contract did not close up the maximum daily trading limit. Because of the higher limits, it closed at $19.35 a bushel, up 82 cents. The return of regular trading to the wheat pit may signal an end to the greatest run-up in wheat history, with wheat prices rising fourfold in a single year.

For farmers, that puts the 2008 Minneapolis wheat market atop the list of legendary bull markets. There haven't been many: the 1970s boom fueled by Russian exports, the drought-stressed corn market of 1988, the grain spike of 1996 and the soybean market of 2004.

"Absolutely, this is one for the record books, make no mistake about it," Usset said. "This will be talked about."

Tom Webb can be reached at twebb@pioneerpress.com or 651-228-5428.

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