TRI-CITIES, Wash. — The promise of a profitable year for Washington wheat farmers became more likely Thursday because of events on the other side of the globe.
U.S. wheat prices, which have been climbing steadily over the past month, surged as markets reacted to word that Russia would stop exporting wheat from Aug. 15 to Dec. 31. A drought has decimated that country’s huge crop.
Washington wheat farmers, who are in the midst of harvest, typically see prices drop this time of year because so much wheat reaches the marketplace at once.
But wheat futures traded at a 23-month high Thursday, reaching $7.79 per bushel for September delivery on the Chicago Board of Trade, after Russian Prime Minister Vladimir Putin announced the ban on grain exports from his country.
September wheat futures were up to 60 cents per bushel higher Thursday than the previous day on the Portland grain exchange. Wheat for September delivery was at $6.75 to $7 per bushel — up nearly $2 per bushel from last month.
“It’s certainly rare to have prices go up in harvest. But we have never seen this much of a rise in a three-week period,” said Brett Blankenship, president of the Washington Association of Wheat Growers. “It’s been a pleasant surprise, a phenomenal run-up at harvest time.”
At Tri-Cities Grain in Pasco, where newly harvested wheat is piling up, general manager Damon Filan said he could recall only one other time in his 30 years in the business that prices climbed at this rate during harvest.
With Russia’s export ban, Washington wheat is going on the market at the right time, said Glen Squires, vice president of the Washington Grain Alliance. Farmers who eschewed contracts to sell their wheat on the open market particularly should benefit.
“It wasn’t that long ago (farmers) were looking at $4 wheat, and that’s not enough to cover production costs,” Squires said.
Agricultural analysts say the U.S., Argentina and Australia should benefit most from the jump in wheat prices.
And the average yield of the U.S. crop this year also is up, said Steve Mercer, spokesman for U.S. Wheat Associates.
“We have plenty of wheat in the U.S. and plenty in the world,” Mercer said. He said there should be no problem supplying the needs of the domestic market even while more wheat is exported.
Agricultural experts say it’s not yet known if the increased demand for American wheat might bump prices higher for flour. But Filan said he thinks prices could stay up for a while.
“I think it’s going to be wild for the next 14 months,” he said.
Washington wheat growers expect to send plenty of wheat to market, thanks to a cool and wet late spring that particularly benefited dryland wheat.
Yields of Washington winter wheat are predicted this year to reach about 65 bushels per acre. That’s up from 59 bushels in 2009, while the spring wheat harvest is projected at a record 56 bushels per acre, according to a forecast by the U.S. Department of Agriculture’s National Agricultural Statistics Service.
The payoff of a bountiful year also trickles down from farmers into their communities as growers pay off debt, purchase new equipment or vehicles or buy new items for their homes.
“This is going to balance some budgets,” said Dana Herron, an owner of Tri-State Seed in Connell and a commissioner of the Washington Grain Commission.
“Farmers are leaving my office with smiles and not many frowns. And when these guys make money, the entire community makes money,” Herron added.