Inland Northwest wheat producers face a potentially softer post-harvest marketplace heading into next year, due partly to damage-causing weather conditions and a plentiful wheat and corn supply worldwide, industry observers here say.

The average price for soft white wheat, this area’s predominant crop, had slipped further as of earlier this month, to $6.91 a bushel, down from $7.24 a year ago and just over $8 two years ago.

“There’s a lot of wheat in the world, so that’s causing the price to come down,” says Glen Squires, CEO of the Spokane-based Washington Grain Commission.

Exports of soft white wheat also have fallen, down about 6 percent from a year ago, but they they haven’t fallen as severely as exports of soft red and hard red winter wheat varieties, which are grown mostly in other areas, Squires says.

“The current year is a little softer for the U.S., but our white wheat actually is doing pretty well. One challenge for the crop being marketed right now is production was the lowest since 1991,” he says.

However, demand has remained relatively steady, so that level of demand combined with the reduced U.S. production is “providing a little more support for prices than normally would happen,” Squires says. 

Worldwide production of all varieties of wheat this year is being projected at 719 million metric tons, up from 714 million tons last year and 657 million tons the year before, he says. Despite the climbing production, the Inland Northwest has reliable demand for its soft white wheat from overseas customers such as Japan, South Korea, Taiwan, and the Philippines, Squires says.

The winter wheat that’s in the ground right now  suffered from a lack of moisture in the fall during planting, followed by a hard freeze that caused a lot of damage, he says, adding, “We’ll have a lot of reseeding in the spring.”

Despite softer prices, the industry here is benefiting from a still relatively new $17 million, high-capacity grain-handling terminal near Rosalia that loads wheat into railcars for export. It’ began ramping up in late 2013 and is expected to help farmers in the Inland Northwest remain competitive.

In a separate big ag project aimed at minimizing shipping rates and grower costs, a limited-liability company formed by a number of grain cooperatives kicked off construction last month on a $26.4 million rail loading facility between Craig Road and Interstate 90 on the West Plains.

The grain shipment terminal will have the capability to handle 2 million bushels of grain and to assemble 110-car trains for grain shipment on BNSF Railway tracks. Construction of the terminal and surrounding infrastructure is expected to be completed in time to ship the 2015 harvest crop.

Northwest Farm Credit Services, the big Spokane-based agricultural lender, said in an October report that wheat prices, caught between weak corn markets and a record-breaking world wheat crop, “are expected to be near the break-even point for most wheat producers,” while prospects for short-term improvement in sugar beet and potato processors’ profitability are limited.

Looking ahead, the cooperative said global market trends and reduced competitiveness of U.S. exports might also impact the apple, dairy, and cattle industries. Lower export demand already is impacting the forest products and hay industries, it said.

However, the full impact of California drought conditions has yet to be felt, and without improvement, production shortages in 2015 could boost the price of a broad swath of agricultural commodities.

Last month, it reported earnings of $173 million for the nine months ended Sept. 30, a $2.2 million increase compared with the year-earlier period.

In a press release, Northwest FCS President Phil DiPofi said, “Several sectors of the agricultural economy have rebounded in recent years, which has helped strengthen our financial position.” However, he added, “Looking ahead, commodity price volatility, reduced exports, and weather-related events will bring new challenges to producers.”

—Kim Crompton