Tuesday, April 18, 2017

Wheat highs and lows

Best of Times, worst of times for Idaho Wheat

Blackfoot—After the greatest year on record, Idaho wheat producers now face one of their worst market years and they’re sitting on mountains of unsold wheat. 

With wheat prices at $3.40 a bushel this week in Blackfoot, growers are operating below the break even mark.

“There’s five-million bushels of wheat still in storage that needs to move before harvest in Southeast Idaho,” said Clark Johnston, grain marketer at Agrisource. “There’s a glut on the world market, we’re going to carry over about 50-percent of stocks-to-use ratio for next year. In the US the last report showed about 42-percent holdover which is still a lot of wheat but at least it is not 50-percent.”

The hold over wheat has drastically affected spring planting. According to the USDA planted wheat this year stands at 46.1 million acres, down 4.1 million acres and ranks as the smallest acreage planted in the United States since 1919. The winter wheat acreage planted this year is estimated at 32.7 million acres, down 9% from last year and the second-lowest planted acreage on record. 

“There’s a lot of wheat in Idaho this year. So much wheat that flour mills are not taking bids at all. They’re not buying anything until the new crop starts in July. The earliest bids is a July delivery date right now. The millers say their needs are met and the mills don't need anything right now, they got enough,” said Johnston.

US wheat production in 2016 was 2.310 billion bushels. Those high numbers come with 9-million fewer acres. Blaine Jacobson with the Idaho Wheat Commission says in the midst of oversupply and low prices, Idaho producers had the greatest production year on record.

“Last year was incredible for wheat production,” said Jacobson. “Idaho averaged 91 bushels per acre and it was not only an all time record for Idaho, but Idaho led all of the wheat growing states. Idaho is number one in wheat production in the US in terms of bushels per acre.” 

But the greatest production year in Idaho come at a time when demand is at a record lows. That Low demand of has impacts on other crops in Idaho. Johnston says producers are looking at other crops but it’s a tough decision requiring split second timing.

“What are they going to plant? The malt barley guys have cut acreage too and we can’t make money on potatoes. A few producers are planting alternative crops like canola, but thats a minimal amount of acreage. They’re still going to plant wheat, no question about it. The winter wheat crop acreage is good and the crop looks good even with the wet spring, but something has to happen in terms of worldwide crop failure to get those prices back up,” said Johnston.

Johnston says that many Idaho farmers are hanging on for a wild market ride, while a few are gambling and hoping for a break.

“If I’m a betting man, not everyone in the world can have a good year,” said Johnston. “Every year things happen and while it looks bad now, I think things will even out.”

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