Once again this year, Inland Northwest wheat producers could face a softer post-harvest marketplace moving into next year. 

Scott Yates, Spokane-based director of communications and producer relations for the Washington Grain Commission, confirms that this year’s post-harvest market is awash in wheat due to a worldwide surplus, despite an average production year for most Inland Northwest farmers. 

“Prices have come down significantly since the highs that were recorded beginning in 2008 and extended through the Russian grain embargo,” Yates says. “This is the time to batten down the hatches.”

Yates says prices have dropped as countries previously looking to buy wheat opt to grow it themselves, and those countries already growing wheat simply grow more rather than buy. Additionally, he says the past three years have brought good weather, resulting in good crops around the world. 

“Wheat is a world commodity, and we can’t sell it for much more than it can be purchased somewhere else, although our quality does tend to allow U.S. wheat to be sold for a bit more,” he says. 

Of the six classes of wheat, the soft white variety is grown predominantly in the Northwest. According to Yates, soft white wheat makes up 80 percent of Washington’s wheat, the other 20 percent being hard winter and hard red spring wheat. 

“Soft white is one of the highest priced of the six classes of wheat right now, although that’s not saying much as even for soft white farmers, prices are near or below the cost of production,” says Yates. 

“Nevertheless, our farmers are lucky to grow a class of wheat that is in demand and to have solid customers like Japan, South Korea, Thailand, and the Philippines. The U.S. has also started to emphasize Latin America, and all classes have increased their exports into that region,” he says. 

Yates says exports of soft white wheat are down 5 percent from last year at this time. However, U.S. total wheat exports are down 14 percent. 

“We’re a lot better off than most of the wheat classes,” he says. “But again, it’s more a problem of supply, not demand. Here, we’ve had a few years of short production due to the drought.”

As for worldwide production, Yates says it’s been a softer year for the U.S., but a good year for the rest of the world. 

“U.S. wheat production barely held steady, but crops elsewhere around the world set records, combining to push world production to 733 million metric tons, the third consecutive record,” says Yates. “This has created the largest stockpiles of wheat in almost 30 years, according to the International Grains Council.”

Spokane-based agricultural lender Northwest Farm Credit Services said in an October report that Northwest wheat production was limited by drought conditions, which caused protein levels that were either too high for soft white wheat or too low for hard red wheat. 

It also noted prices were below most growers’ breakeven price, between $5.50 and $6.00 per bushel. Lower prices were attributed to record-setting world wheat production and high ending stocks, the amount of wheat in stock at the end of the reporting period. 

Looking ahead, the cooperative said winter wheat planting intentions are uncertain for producers in areas where arid conditions persist. Other industries experiencing lower quality and smaller yields include hay, potato, and apple harvests. Early sugar beet harvest reports are positive, although growers still anticipate production challenges associated with the hot growing season.

Last month, Northwest FCS reported earnings of $185.8 million for the nine months ended Sept. 30, a $12.4 million increase compared with the year-earlier period. 

In a November press release, Northwest FCS President Phil DiPofi said that while 2015 has been a strong year of financial performance for the organization, it continues to see greater commodity price volatility and economic stress from weather-related events throughout the Northwest. 

“As we work with our customers to prepare for the next growing season, we anticipate seeing more challenging operating situations for some,” says DiPofi. “Overall, producers are in relatively strong financial positions due to several recent good years for agriculture.”

Here, the industry is expected to benefit from a couple of in-progress or proposed ag capital projects involving improvement or construction of new storage and processing facilities. 

Waterville, Wash.-based HighLine Grain LLC, which is owned by four Eastern and Central Washington grain cooperatives, is developing a $26.4 million grain loading facility near Medical Lake. The facility is expected to be completed this year, or early next. It’s expected to have a capacity of more than 2 million bushels and a 110-railcar load and unload grain elevator. 

Separately, as the Journal reported recently, Archer Daniels Midland is considering a major expansion of storage, milling, and shipping capacity at its mill complex here at 2301 E. Trent. 

A predevelopment application on file with the city lists the project value at $200 million, although ADM now disputes that value. The project is envisioned to include construction of two storage and milling structures and other improvements for truck and rail transport.

—LeAnn Bjerken