Growers hope grain rally continues
World wheat stocks lowest since 1977, consumption up
Dave Wilkins
Capital Press
Farmers can only hope this grain market has legs and their timing is good.
A couple weeks ago, Idaho malt barley contracts were available for $17 per hundredweight.
Prices have come down a couple bucks since, but it's still "pretty enticing if you haven't contracted yet or you haven't made up your mind if you're going to raise spring wheat or barley," said Evan Hayes, who dry-farms grain crops near Soda Springs, Idaho.
Unfortunately, a big chunk of the Idaho malt barley acreage was probably contracted at lower prices, he said.
Personally, Hayes wishes his timing had been better. He made the "horrible mistake" of contracting early at a price far below the recent peak, but still higher than he'd ever gotten before.
"It was better than I'd ever had in my life, and I thought, 'gee that's great,'" Hayes said in a telephone interview last week.
He was stunned when contract prices continued to rise this winter. But how is a grower to know?
"You don't," Hayes said. "Never in history has anything like this happened before."
Some ag economists see some parallels between today's lofty grain market and the Russian wheat deal in the early 1970s.
Russia's decision in 1972 to buy 440 million bushels of wheat from the United States was a huge shot in the arm for U.S. agriculture.
Wheat prices soared and so did food prices. The U.S. dollar weakened, global economic growth increased and oil prices spiked.
The same thing is happening today, only it's U.S. ethanol production, not foreign grain purchases, that's fueling the boom, said Paul Patterson, a University of Idaho extension agricultural economist.
Many farmers may be asking how long this grain boom will last. Some may fear it will come crashing down like the high tech-led stock market bubble of the late 1990s or, more recently, the collapse of the U.S. housing market, he said.
But Patterson believes U.S. grain prices will remain high, on a historical basis, for another three or four years.
World wheat stocks are the lowest since 1977, while consumption has risen 55 percent, he said.
"We're barely keeping up with demand," he said last week at UI's Magic Valley cereal grains school in Burley.
Soft white wheat prices in Portland have been as high recently as $13 to $14 per bushel.
Unfortunately, grain production costs are also on the rise, industry officials said.
Producers need to be flexible, Patterson said. They could consider leasing farmground rather than buying it or entering into share crop arrangements with landlords.
"Know your cost of production," Patterson advised.
World wheat stocks lowest since 1977, consumption up
Dave Wilkins
Capital Press
Farmers can only hope this grain market has legs and their timing is good.
A couple weeks ago, Idaho malt barley contracts were available for $17 per hundredweight.
Prices have come down a couple bucks since, but it's still "pretty enticing if you haven't contracted yet or you haven't made up your mind if you're going to raise spring wheat or barley," said Evan Hayes, who dry-farms grain crops near Soda Springs, Idaho.
Unfortunately, a big chunk of the Idaho malt barley acreage was probably contracted at lower prices, he said.
Personally, Hayes wishes his timing had been better. He made the "horrible mistake" of contracting early at a price far below the recent peak, but still higher than he'd ever gotten before.
"It was better than I'd ever had in my life, and I thought, 'gee that's great,'" Hayes said in a telephone interview last week.
He was stunned when contract prices continued to rise this winter. But how is a grower to know?
"You don't," Hayes said. "Never in history has anything like this happened before."
Some ag economists see some parallels between today's lofty grain market and the Russian wheat deal in the early 1970s.
Russia's decision in 1972 to buy 440 million bushels of wheat from the United States was a huge shot in the arm for U.S. agriculture.
Wheat prices soared and so did food prices. The U.S. dollar weakened, global economic growth increased and oil prices spiked.
The same thing is happening today, only it's U.S. ethanol production, not foreign grain purchases, that's fueling the boom, said Paul Patterson, a University of Idaho extension agricultural economist.
Many farmers may be asking how long this grain boom will last. Some may fear it will come crashing down like the high tech-led stock market bubble of the late 1990s or, more recently, the collapse of the U.S. housing market, he said.
But Patterson believes U.S. grain prices will remain high, on a historical basis, for another three or four years.
World wheat stocks are the lowest since 1977, while consumption has risen 55 percent, he said.
"We're barely keeping up with demand," he said last week at UI's Magic Valley cereal grains school in Burley.
Soft white wheat prices in Portland have been as high recently as $13 to $14 per bushel.
Unfortunately, grain production costs are also on the rise, industry officials said.
Producers need to be flexible, Patterson said. They could consider leasing farmground rather than buying it or entering into share crop arrangements with landlords.
"Know your cost of production," Patterson advised.
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