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Poor Prices Diffuse Record Year's Cheer by Mitch Lies, staff writer Capital Press, December 16, 2005

Port of Portland's Columbia Grain is on pace to set a company record for wheat exports this year, but the high volume isn't helping pay fertilizer and fuel costs for farmers.

Several factors apparently are contributing to the export giant's record year, but increased demand from Asian customers apparently is not one of them. As a result, prices remained flat this week at $3.42 a bushel for soft white wheat.

The record year, in fact, comes in the face of a 1 million metric ton reduction in soft white wheat exports for the Pacific Northwest.

Columbia Grain picked up exports this year that typically are handled by United Harvest, said Tom Hammond, Columbia Grain's president. The Vancouver, Wash.-based United Harvest grain elevator was shut down for repairs from May until October after explosions in two dust bins.

Columbia Grain also benefited from increased corn and oil seed exports, which shifted wheat exports away from certain elevators that traditionally dabble in wheat and to Columbia Grain. The increased corn and oilseed exports were fueled in part by a relocation of vessels from New Orleans to the Port of Portland due to hurricane Katrina.

The combination of events is helping Columbia Grain post a projected 3.7 million tons of wheat exports in 2005, the company's biggest year for exports since it was formed in 1978.

When asked what the record volume meant to Northwest farmers, however, Hammond said: "Probably not much."

"Demand is down," said Dan Steiner, grain merchandiser for Pendleton Grain Growers and Morrow County Grain Growers. "We're seeing, particularly, Chinese demand is way off (due to a 4 million metric ton increase in their harvest)."

Steiner said growers probably can't expect the situation to change any time soon either, with free-stock carry over in 2006 projected at 89 million bushels, up 26 million bushels over last year, and with Australia making a remarkable recovery from drought conditions and getting high soft white wheat production from its recently harvested crop.

"It's scary," Steiner said. "If you're a soft white wheat grower, there are some real challenges ahead of you."

Adding to concerns, Steiner said the USDA last week projected soft white wheat exports at 175 million bushels for 2005, or 33 million bushels less than soft white wheat exports last year. The USDA, meanwhile, is projecting a production figure of just under 300 million bushels of soft white wheat.

"Growers are really struggling," said Tammy Dennee, executive director of the Oregon Wheat Growers League. "The price they are getting is under the cost of production, especially considering increases in the costs of fertilizer and fuel. Finding financing is becoming an issue for some of our growers."