Agricultural market remains strong despite dip in wheat prices
-December 19th, 2013
Northwest wheat producers face a changing marketplace heading into 2014, with grain prices being pressured slightly lower because of weaker corn prices and a bountiful world wheat crop.
Industry observers say the Inland Northwest’s predominant soft white wheat crop remains in demand overseas, in countries such as Japan and South Korea. The average price for soft white wheat was down slightly in early December, at $7.24 per bushel, compared with just over $8 a year ago.
Glen Squires, CEO of the Spokane-based Washington Grain Commission, says worldwide production of wheat rose by 53 million metric tons this year to 708 million metric tons.
“Basically, there is a lot of wheat out in the world, so we’re competing against a lot of wheat,” Squires says. “That has put downward pressure on prices, and that scenario will probably remain for much of the year. That’s for our marketing year that ends next May.”
He adds, “Our current export pace is down about 3 percent compared to this time last year, so we’re hanging in there in terms of our exports. One of the values we have is a quality product. Lots of times, it’s used for blending with lower-quality wheat that countries may get from others.”
Squires says Washington state wheat growers produced a 2013 crop totaling 144.2 million bushels this year, with a yield of 67 bushels per acre, down 1 percent from 146 million bushels last year.
“Those were good yields, with very little change,” he adds.
Squires says another recent market dynamic is an increase in U.S. wheat purchases by buyers in China, jumping from 400,000 metric tons purchased from U.S. growers in the 2012-13 marketing year to 4 million metric tons bought as of early December, with six months of the current marketing year remaining, he says.
Dick Hatterman, general manager of Rosalia-based Cooperative Agricultural Producers Inc., says a new $17 million high-capacity grain-handling terminal near Rosalia is loading wheat into railcars for export. It’s expected to help farmers in the Inland Northwest remain competitive.
He says slightly lower grain prices are causing some concerns among farmers, but they are paying less for fertilizer and fuel costs than a year ago.
“The grain prices are about $1 to $2 lower than last year, and about $2 to $3 lower than the highest of the last couple of years,” Hatterman says. “Some of the input costs have gone down, but that’s going to put some financial strain on farming operations.”
Weather factors appear positive, though. He adds, “Fall-planted crops are looking great going into the winter, and we have excellent moisture conditions for crops that will be planted in the spring.”