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Farmers Harvesting Wheat at a Loss by Thomas Clouse Walla Walla Union-Bulletin, August 15, 2019

A crop forecast showing increased production has resulted in prices falling twice this week.

Massive combines have begun transforming much of the Palouse from waving fields of wheat into vast expanses of stubble. But the farmers cutting that grain are selling it at or below what it costs them to produce it.

The crop got a slow start this year caused by late snows and bitter cold in February. Hot and dry summer days allowed the wheat to mostly catch up, but farmers got hit this week by a crop forecast by the U.S. Department of Agriculture that drove already low prices down even further.

"Farmers are pretty upset about the USDA mass crop production report," said Michelle Hennings, executive director of the Washington Association of Wheat Growers. "Farmers emailed me that they were upset."

On Friday, the base price at Portland for a bushel of soft white wheat was $5.98. Hard red winter wheat was trading at $5.20 a bushel and white spring wheat traded at $5.90.

But on Monday, the USDA came out with its August crop production report which showed a 3% increase in wheat production from the July report. It also predicted a drop in both corn and soybean acreage from the June report.

Following the release of that report, wheat prices dropped on Monday and again on Tuesday. It resulted in a combined drop of 36 cents per bushel for hard red winter wheat; a drop of 17 cents for white spring wheat; and 13 cents for soft white wheat.

"So, those are pretty big drops," said Joe Bippert, program director at WAWG. "I don't have the specific number, but spring wheat especially is as low as I've ever seen it. Hits like this are really bad for any farmers who planted spring wheat this year."

Mike Miller, who farms near Ritzville, had just started harvesting on Wednesday after weekend rains pounded the region and blunted several area wildfires. The harvest had to be put on hold until the sun dried out the wheat so that kernels showed below 12% moisture content.

"I'm hearing the yields are average to above average," Miller said. "We've heard of some pockets below average but some way above average."

But that appears to be where the good news stops.

"I can't come up with (good news) and I'm an optimist," Miller said. "Our wheat is still in demand, but other pressures are influencing the price right now. I don't know where the floor is on wheat. I have no idea."

As of Wednesday, farmers had harvested about 73% of their winter wheat and 33% of the spring wheat. Based on the five-year average, farmers normally have cut about 87% of the winter wheat and 62% of the spring wheat, Hennings said.

"I'd say we are about a week-and-a-half later than we normally are," said Hennings, who farms with her husband near Ritzville. "When I've driven around, there is still a lot of green (spring) wheat out there."

Farmers need to get about $5.50 a bushel for wheat to cover costs, which includes diesel needed to plant, spray and harvest the crop, Hennings said.

"I wish I would see a big jump in prices," she said. "But with the trade situation we are in, everything is so sensitive. When we see prices fluctuate at all, the farmers get nervous."

Some 90% of the wheat grown in Washington is shipped to Portland and exported. The two biggest buyers are Japan and the Philippines.

Hennings said trade officials had hoped that Congress would ratify new trade deals with Canada and Mexico because the delays in the deal to replace the North American Free Trade Agreement has a ripple effect on other deals.

"It's important that our trade partners in Japan can see that we can pass and sign a trade agreement with our neighbors," Hennings said. "We use that to finalize deals with other partners."

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