As fall harvest approaches, Inland Northwest farmers are hoping to realize prices for soft white wheat that are nearly double what they received last year.


The price of wheat, posted prominently in big letters on a readerboard in downtown Colfax and followed avidly in every Eastern Washington farm community, was $6.40 a bushel recentlyand that tells the story.


Prices are high, $6.40 in Portland right now, which is unprecedented, says Gary Squires, vice president of the Washington Grain Alliance.


All farmers become a bit like futures traders when it comes to selling their crops, says Washington Wheat Commission Chairman Randy Suess, a Colfax farmer. The higher the price, the more tempting it is to lock in the price now, well before the crop has been harvested and shipped to Portland, a key ocean shipping point.


Farmers lock in the price by contracting to deliver a specified amount of wheat later at todays prices, Suess says. Yet, farmers who do lock in the priceand many have done so on part or all of their crop months agostill hope to receive near-peak amounts for their grain if the price remains high during the coming weeks.


Its difficult to predict how prices will move, he says.


My guess is about as good as anyone elses, and Ive never guessed this market yet, Suess says. I contracted earlier for this crop, and now I look back, and its a lot higher now.


Overall, about one-third of Washingtons wheat crop is contracted so far this year, up from an average of 10 percent to 15 percent.


Right after harvest last year, the price of soft white wheat climbed to $4.25 a bushel, and a lot of farmers contracted to sell some of this years crop for $4.25, because who ever heard of prices over $4? Suess says. Even securing a good price, however, doesnt eliminate the uncertainty inherent in farming, he says.


You can contract that wheat at that price, but you dont get the check until its in the bin, and nature can be fickle at harvest time or other times, adding to risk, he says. We could have a hailstorm and wipe out the crop, Suess says.


For farmers, the exuberance about todays higher prices is tempered by rising costs, Suess says.


Our fuel and fertilizer costs have gone through the roof, he says. Fuel has tripled in five years, and fertilizer has almost doubled in the same period.


Getting the crop to Portland costs about 60 cents a bushel, Suess says. Costs just to plant and grow wheat must be met before farmers make any profit. New equipment is expensive, with new combines up to around $400,000 on average, Suess says, making it difficult for the Northwest to compete with Midwest markets that use contracted custom cutters at harvest time.


Despite those caveats, no one denies that the high wheat prices should improve profit margins.


In a community like Colfax, wheat is the major driver in the economy. But the benefits of higher wheat prices arent as direct for local stores as you might think, says Betty Higginson, co-owner of Hunter Marketing Associates Inc., which operates both Hunters Furniture and Hunters Appliances, in Colfax.


When Higginson first went into business with her husband in Colfax 12 years ago, she anticipated a noticeable surge in sales at harvest time.


When we first came here and were talking to people, waiting for the harvest, we thought people would come running into the store with cash in hand, Higginson says. Yet, she says, the companys stores havent experienced a marked swing in sales from year to year whether wheat prices were up or down.


With wheat prices high right now, I see no difference. This year hasnt affected us much at all, Higginson says.


Jay Penick, President and CEO of Northwest Farm Credit Services, the Spokane-based, federally chartered ag-lending cooperative, the biggest beneficial effect for farmers right now is in their attitude. He says, though, that it would take strong markets for several years to persuade farmers to invest substantially more in land or equipment.


For this year, Northwest Farm Credit Services has lent out $473 million to about 2,500 wheat growers, up from $448 million loaned to 2,660 wheat growers last year, which the cooperative characterizes as normal year-to-year growth.


Rich Hadley, president and CEO of Greater Spokane Incorporated, says that optimism often gets a boost when agricultural prices rise.


We would anticipate when commodity prices are better, we usually have a stronger show at Ag Expo and Farm Forum, because people are more optimistic and willing to make more commitments, Hadley says. Greater Spokane Incorporated sponsors both events.


When farmers and their family members shop more in the Spokane area, the spending impact goes beyond individual purchases, Hadley says.


Just like any citizen in our community who gets a raise, they tend to find more opportunities to shop, Hadley says. That spends around in the economy at least two times beyond the first spending.


Suess says that perhaps, after the harvest is in this fall, local businesses might experience a modest measurable increase in revenues, but contends that ultimately everyone benefits from strong wheat prices. For example, he says, Washington State University just accepted $1.3 million from the Washington Wheat Commission for research, which in turn will help wheat growers improve their crops over time. That money comes from a fee collected on all of the wheat sold in the state.


Wheat production, a $1-billion-dollar-a-year industry here, is a vital part of the Washington economy, Squires says.


Inevitably, one of the reasons for the Northwests high wheat prices is bad luck elsewhere, Suess says.


You hope no one else has a bad crop, but somewhere in the world has got to have a disaster for prices to be so good here, Suess says. If we all produce our average, the price drops down.


A drought in Australia, the Northwests main competitor in soft white wheat production, caused that countrys crop to drop from 26 million metric tons to 10 million last season.


Growers of hard red winter wheat in Oklahoma and Kansas took a big hit, tooOklahoma was dried out and Kansas was under water, Squires says. All this boosts prices for Washington wheat.


Suess says 90 percent of Washingtons wheat, valued for its low water content, which creates a high volume of food per weight, is exported.


Yemen has been one of our bigger buyers, Suess says. They love soft white wheat; they make flatbreads out of it.


Yet, he adds, if our prices get too high, they look to the other markets, such as the Black Sea region, which produces a wheat thats lower in protein but more affordable.


Another factor affecting prices is the actions a federal humanitarian grain reserve program, administered by the U.S. Department of Agriculture, which can release up to 1 million metric tons of wheat, corn, sorghum, or rice in a year to respond to emergency humanitarian needs. When wheat is released through that trust, the price can dip, Suess says.


It would take a few years of strong returns to really loosen the grip that speculative fears have on farmers, Suess says. To the farmers, he says, the immediate benefits of record-breaking prices are easy to sum up.


It helps to pay the bills, he says.


Contact Jeanne Gustafson at (509) 344-1264 or via e-mail at jeanneg@spokanejournal.com.