Experts expect agricultural commodity prices to remain strong in the coming year, though perhaps not on par with the nearly $12 a bushel the soft white wheat industry is experiencing right now, as world supplies begin to rebound and the benefits of high prices are tempered by rising production costs.
Tom Mick, chief executive officer of the Washington Grain Alliance, says winter wheat yields in the Inland Northwest might fall next year, because extremely dry conditions predominated at planting time in the fall. Since then, rainfall has been somewhat low1 inch to 1.5 inchesfor winter wheat, which Mick says grows 4 inches to 5 inches after a fall planting, then remains dormant until spring.
Global wheat inventories likely will continue to be tight in 2008, as key competitor Australia prepares for a second year of severe drought, Mick says.
As for prices, Mick says, Just about any ag commodity is up this year.
The thing about it, he says, is that most farmers havent experienced the full benefit of the current dramatically high prices because there is no wheat left to sell. He estimates most farmers sold their 2007 wheat crops for $5 to $5.25 a bushel.
Mick anticipates that supplies will be better next year in some competing markets, such as the Black Sea region, but wont reach normal levels.
Tom Marsh, associate professor in the school of economic sciences at Washington State University, says world wheat stocks are down 9 million metric tons, and he doesnt anticipate that shortfall to be overcome entirely next year. He says he doesnt think wheat prices ever will return to pre-2007 levels, which typically fluctuated between $3 and $4 a bushel.
Marsh says also that he thinks U.S. ag exports will remain very strong as the weakening dollar improves the purchasing power of other countries in U.S. markets, making commodities such as wheat that much more appealing.
Northwest Farm Credit Services President and CEO Jay Penick says one area that tempers the outlook somewhat is rising operating costs for farmers, including higher fuel and fertilizer prices.
The balances were looking at are how much our operating expenses and operating costs will increase and how will they eat up margins, Penick says.
Penick says that though a few crops, such as onions, appear to be down, most agricultural commodities look to have a strong year ahead.
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