This year’s farming season had its challenges — both from Mother Nature and Washington, D.C.
In the end, producers in north central Idaho and southeastern Washington enjoyed good overall crop yields, survived threats from trade wars with China and now are looking at wheat prices a dollar ahead of the past two years.
“Generally speaking, we had an above-average year,” said Nez Perce County Extension agent Doug Finkelnburg. “We had above-average returns on winter wheat and really strong yields on garbanzo beans.”
The U.S. Department of Agriculture Portland Daily Grain Report last week listed soft white wheat prices between $6.20 and $6.35 a bushel.
Dry pea, lentil and garbanzo prices, however, plunged 40 percent recently because of retaliatory tariffs imposed by India, the No. 1 customer for those products. Pulse prices haven’t been this low since the early 2000s and are likely to result in a dramatic decline in acres planted to dry peas, lentils and garbanzos next spring, according to the USA Dry Pea and Lentil Council at Moscow.
At the beginning of November, U.S. Wheat Associates published an update on world and U.S. wheat supply and demand, based on information from the USDA.
Highlights of the report include expectations that 2018-19 global wheat production will fall for the first time in five years, by 1 percent. Wheat production in Australia is likely to be down 26 percent because of severe drought in the central region of the country.
U.S. wheat production, on the other hand, is estimated to be 8 percent higher than last year.
Worldwide consumption of wheat is forecast to be 4 percent above the five-year average, and Chinese domestic consumption is expected to reach 5 percent above the five-year average.
Wheat exports from countries such as Australia and Russia are likely to drop, while U.S. wheat export sales for 2018-19 are predicted to reach 27.9 million metric tons, up 14 percent. As of Oct. 11, U.S. wheat exports were 18 percent behind last year’s pace, due in part to the loss of the Chinese market over tariffs imposed between China and the U.S. earlier this year.
Glen Squires, chief executive officer of the Washington Grain Commission, said even though wheat prices are up, “just think what they could be” if it were not for the tariffs between China and the U.S.
The problem between the two countries as it relates to agriculture has to do, in part, with the subsidization of Chinese farmers by their government of more than $10 a bushel.
“Which is clearly not (World Trade Organization) compliant,” Squires said.
In addition, China has failed to live up to its promise to import 9.6 million tons of wheat from other countries in order to be accepted into the WTO.
“So, just like intellectual property, we’ve got the same issues going on with China,” Squires said. “So we’re hopeful that this thing can all get resolved, and tariffs can go away and they will agree to what they’ve agreed to in the past.”
Squires pointed out that at this time last year China had purchased about 275,000 million metric tons of Pacific Northwest white wheat. This year the country has bought nothing. But there is hope that once the tariff disagreements are worked out China will return as a customer because of the quality of wheat grown here.
“China is the largest wheat-producing country in the world,” Squires said, projected to produce 128 million metric tons this year. The U.S., in comparison, produces about 51 million metric tons.
Chinese consumption of wheat is 122 million metric tons a year.
“What’s happening is, because they overproduce because of this ($10 per bushel subsidy), their stocks continue to build. They have 52 percent of the world’s wheat stocks, and the USDA says they export about a million tons.
“China had a ban on imports from the Pacific Northwest for about 30 years,” he said. “It took a lot of effort and time to get through that so we could sell wheat to them, and they want it.”
China produces mid-protein level wheat that is good for noodles, but not much else. That’s why the country buys higher- and lower-protein wheat, such as hard red spring wheat or soft white wheat, to combine with its own grain, allowing millers to sell flour good for pastries or bread.
Squires said he was in China last year before the tariffs were imposed, and soft white wheat exports from the Pacific Northwest had reached 300,000 million metric tons.
“And one miller said we could easily go to a million tons. There’s that kind of demand. So if people can get agreements and get these issues sorted out, we’re sure that they’ll come back and start buying from us again,” he said. “They have in the past, and it was increasing.”
Hedberg may be contacted at firstname.lastname@example.org or (208) 983-2326.