Wheat Prices Plunge 32 Percent Bumper Crop, Foreign Competition Blamed For Sharp Drop Since High Reached Last May

The price of Inland Northwest wheat fell again Tuesday, continuing a slide that’s cast a shadow over an industry that celebrated near record prices as recently as May.

“The selling began heavily in September and it has snowballed ever since,” said Lowell Serfling, who tracks prices for the government’s Livestock & Grain Market News Service office in Portland. “We’ll probably be down to $3.50 (per bushel) before it’s over.”

In five months, the cash price paid for soft white wheat, the predominant Northwest variety, has plummeted $1.98 per bushel from $6.20 to $4.22. That represents a 32 percent drop in the value of an important Inland Northwest commodity that supports thousands of families and businesses.

The fall has caught farmers holding about half their 1996 wheat harvest, hoping for better prices. The crop was a record in both Washington and Idaho.

“I can’t believe prices will go a lot lower,” said Dan McKay, chairman of the marketing committee for the Ritzville-based Washington Association of Wheat Growers. “But we do have a big wheat crop sitting out there and it’s got to move somewhere. That’s scary.”

Analysts said the downward spiral reflects government forecasts for larger wheat crops worldwide and a move by Argentina to undercut competitors with low-priced grain.

The change comes at a sensitive time for congressional members campaigning for re-election and the U.S. Department of Agriculture, which is trying to implement Congress’ new federal farm bill. The new law no longer pays farmers greater subsidies when prices fall. It issues a declining, flat payment to farmers in each of the next seven years as a transition away from taxpayer-supported subsidies.

“It looks like some farmers have missed it (high prices),” said Mike Krueger, a Portland commodities broker. “We need something pretty sexy to turn this deal around.”

Portland brokers on Tuesday bid $4.22 per bushel, down four cents, for white wheat. A Spokane farmer would receive about $3.70 per bushel after deducting shipping and handling costs.

Buyers paid a high of $6.20 per bushel on May 17, the highest price in more than 20 years.

At that time, USDA was warning that the nation had the lowest wheat reserves in 25 years. Weather conditions for the coming crop were ominous, and buyers paid a premium for remaining grain.

But weather conditions brightened and USDA forecasters earlier this month raised their estimate of world wheat production for the coming year to 581 million tons.

If that holds, it would be the second-largest crop in history.

Sensing a collapsing market, foreign buyers have slowed sales activity and Argentina has begun offering white wheat for under $4 a bushel.

“All of a sudden, it’s a buyers market,” Krueger said.

, DataTimes ILLUSTRATION: Graphic: Dropping wheat prices