Wheat Prices, Politics On Collision Course Economist, Markets Sound Warning As Farm Forum Opens
On the heels of a stellar year, farmers who gathered in Spokane Tuesday for the largest annual agriculture-related meeting in the Inland Northwest were pelted with some bad news.
A Kansas economist warned that politics threatens to undercut lofty wheat prices that farmers have enjoyed for several months. At the same time, commodity speculators were triggering a fall in prices.
Although the two events were coincidental, it sent a chill through the large and otherwise upbeat crowd at the 1996 Ag Expo and Pacific Northwest Farm Forum.
“Everybody’s in the wagon, but there’s nobody left to pull,” said visiting Portland commodities broker Mike Krueger, alluding to a dearth of buyers after institutional investors dumped 45 million bushels of wheat in the market. “The market is turning violent, again.”
Portland grain traders lowered their bids for Pacific Northwest soft white wheat by 11 cents a bushel to $5.28 Tuesday. Chicago futures traders bid 16 cents less for every bushel of Midwest wheat delivered in March, an $800 difference on a 5,000-bushel trade.
However, prices are still $1 a bushel higher than one year ago and the U.S. Department of Agriculture says carry-over wheat stocks are their lowest in 20 years.
The untimely fall of wheat prices affects 20,000 farmers and landlords in Washington and Idaho and hundreds of businesses who sell them various goods and services.
It also shows how quickly outside forces can disrupt the commodity markets that dictate what farmers receive for their labor.
Barry Flinchbaugh, professor of agricultural policy at Kansas State University, said that because of the market’s vulnerability to shifts in political power, producers should spend cautiously and not seed everything into grains.
“You think wheat is going to be $5 a bushel until eternity and the export markets will take care of it? Bull!” Flinchbaugh told 200 people attending the Farm Forum at the Red Lion City Center. “I’ve lived through three of these euphoric export binges. Must we learn this lesson, again?”
Chinese leaders, who have spearheaded the past year’s rise in wheat prices by buying millions of tons of U.S. grain, are aging and could be replaced by less friendly rulers, Flinchbaugh speculated.
Congress and President Clinton also could disrupt the marketplace if they fail to act on a budget and farm program reform. A stalemate could trigger a highly regulated 1949 farm program that would make wheat too expensive for export.
“Our farm programs were designed for a different era,” Flinchbaugh said. “We know how to farm the government (programs) of the United States. Now it’s time to farm the global marketplace.”
, DataTimes ILLUSTRATION: Photo
MEMO: This sidebar appeared with the story: TODAY’S SCHEDULE Farm Forum continues at 9 a.m. today at the Red Lion. The Ag Expo trade show is open from 10 a.m. to 6 p.m. at the Spokane Convention Center, Ag Trade Center and Spokane Arena.