June rains boost wheat crops; heat could hurt yields
Beef, dairy remain profitable despite increased feed costJuly 17th, 2014
Northwest wheat growers are expected to see a price drop again next year, after a decline to $6 a bushel in June from a peak of $7 a bushel earlier this year, a midyear report from Spokane-based Northwest Farm Credit Services says.
While strong rainfall in June helped parched wheat crops, it didn’t have an impact on the overall market, the ag lender says. Many farmers were able to contract ahead for up to 35 percent of their 2014-2015 crops, which led to a profitable spring. However, an increase in world wheat supply is likely to continue pushing prices lower, says Michael Stolp, vice president of market research and development for Northwest Farm Credit Services.
“Producers here saw the proverbial ‘million-dollar rain,’ which had a significant benefit for the winter crop,” says Stolp. “It helped save the spring crop too; however, recent heat is likely to expedite harvest in some areas and constrain the yields.”
The U.S. Department of Agriculture is projecting an average price of $6.35 to $7.65 per bushel for the 2014-2015 season for all wheat, based on the high global production, declines in futures prices, and a larger than expected carryout, which is the amount of grain left over after demand has been satisfied.
On the upside, the cattle industry in the Northwest is continuing at record highs, Stolp says. Also, dairy operations are expected to remain profitable; however, higher prices for the alfalfa hay used to feed most livestock and declining milk prices indicate that profit margins might shrink.
After suffering damage from heavy rains last summer, the region’s cherry crops have rebounded and could set a new record, Stolp says. An earlier and smaller crop out of California was oversold, which has led to higher demand from retailers.
Cherry prices peaked earlier this year at between $80 and $90 per 20-pound box; prices moderated in mid-June, but still remained over $40 a box. Stolp says, however, that it could be challenging for growers here to keep up with demand later in the season. The 2014 crop is estimated to be between 20 million and 25 million 20-pound boxes.
Several crop markets might see lower prices this year, specifically potatoes and sugar beets, while supply may remain an issue for hay farmers, due to an early drop in production and the drought in California, Stolp says.
“Overall, agriculture in the Northwest remains strong, but we do have a few areas where market prices have changed and prices are lower, particularly in the grain industry where prices have fallen over the last year,” Stolp says. “But, we can contrast that with commodities like dairy, where prices are at near-record levels.”