October 14, 2006 in Business

Wheat prices hit 10-year high

By The Spokesman-Review
 

Wheat prices are on the rise and lifting hopes among Eastern Washington farmers that tough agricultural economics are turning around.

A bushel of soft white wheat fetched more than $5 this week from Portland grain buyers, the first time in 10 years the dominant crop grown in this region has been so valuable.

The reason: A vicious run of hot, dry weather threatens production shortfalls across Western Australia.

That country is expected to produce less than half of the wheat its farmers harvested last year.

Australia grows wheat that competes with the soft white varieties grown successfully by Washington and North Idaho farmers, which is used to make flatbreads, cakes, cookies and Asian noodles.

The U.S. Department of Agriculture reported Friday that the world’s stockpiles of wheat are at their lowest in 25 years.

The price run follows a disappointing but average crop for many regional farmers. Many were anticipating a bumper crop after a wet spring, but a hard freeze and then the early arrival of hot weather without rains took their toll.

High expectations were tempered with initial harvest numbers, and wheat growers had to be satisfied with another average year.

It was frustrating because a good crop was seen as a promising way to help alleviate soaring prices for diesel fuel and nitrogen-based fertilizers, said Tom Mick, chief executive officer of the Washington Wheat Commission.

The higher prices will help, but a few weeks of high prices won’t erase years of struggle, Mick said.

Anecdotal information over the past year points to declining numbers of farmers as some choose to leave the business rather than drain retirement savings.

Whether the higher prices persuade bankers to extend more credit and farmers to keep planting remains to be seen, but winter wheat seeding this fall shows little drop in acreage.

During the past 45 days, the price of wheat has climbed by more than a $1 per bushel, a rapid rise for a commodity more accustomed to modest climbs and falls.

Behind of the push are worldwide shortages. It began with Argentina and Brazil last year. This year drought settled over the U.S. grainbelt and farmers from other countries also had difficult growing conditions, according to USDA reports.

Add the troublesome forecast for Australia, and the climate is right for higher prices.

Big buyers of Washington wheat this year have been Egypt, Yemen, Japan, the Philippines, South Korea and other Pacific Rim nations.


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