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Wheat prices soared then sank in 2008
TWIN FALLS, Idaho - It was a wild ride for grain producers in 2008.
Wheat prices soared to record highs of near $18 per bu. only to fall back below $6 per bu. by the end of year. Record world shortages of wheat sent prices soaring and growers responded by planting more wheat. In Idaho, growers planted the highest number of wheat acres in 10 years.
Idaho growers harvested 800,000 acres of winter wheat and the crop yielded 75 bushels per acre, 2 bu. per ac. higher than last year. That pushed winter wheat production to 60 million bu., up 16 percent from 51.8 million a year ago. Spring wheat production in Idaho was also up 22 percent.
But after two years of drought in Australia and other weather-related production problems around the world in 2007, growing conditions were nearly ideal, and an all-time record wheat crop worldwide was harvested, pulling prices down.
“We harvested a good crop, and we’ve got a lot in inventory,” said Blaine Jacobson, executive director for the Idaho Wheat Commission.
Even though carryover stocks in the United States are higher than the last several years, stocks are still at very low levels compared with historical numbers.
“I expect supply and demand fundamentals to reassert themselves,” he added.
An infrequent, but costly wheat-quality problem, surfaced again in 2008. Low falling numbers is only a problem every 12 or 13 years and is environmentally related. The condition reduces milling quality.
Barley production was also up a bit in Idaho to just under 50 million bu. from 580,000 acres of barley this fall, up 10,000 acres over a year ago.
Quality was also better than the previous year.
The only major production problem came from the late spring, which delayed maturity in some dryland regions and pushed harvest into mid-October and the unexpected snow storm, said Kelly Olson, administrator for the Idaho Barley Commission.
Malt barley contracts set historic price levels early in 2008, but prices softened going into the 2009 contracting season.
The malt barley industry also saw two large mergers during 2008. Coors and Miller brewing companies merged to become MillerCoors as of July 1. That merger offers the possibility of expanding malt barley production in Idaho. Coors had reached its malt capacity, Olson said, but the merger provides access to some of Miller’s brewing facilities with excess capacity in California.
With Coors Light and Blue Moon, both Coors products, selling so well, the company could decide to increase malt barley production in the West.
“Idaho is well positioned to take part, if that happens,” she said.
The second merger, InBev’s acquisition of Anheuser Busch, the largest procurer of malt barley in Idaho, still holds many unknowns for Idaho growers. With the credit market tightening worldwide, InBev will have to raise millions of dollars to self-finance the deal. Some are speculating that assets such as grain elevators or research and development facilities may be sold to raise cash.
From a policy standpoint, grain producers were pleased to finally resolve the field burning issue. Rules and regulations were written during 2008 that allowed crop-residue burning to take place on registered fields after Sept. 1st. Oversight of the program has been transferred from the Idaho Agriculture Department to the Department of Environmental Quality.
Although growers were disappointed the program wasn’t in place earlier, Travis Jones, executive director of the Idaho Grain Producers Association, said 2008 was a great start.
“It was what it was, given the regulatory hoops that had to be overcome,” he said. “We hope for more coordination and participation next year.”
Another major policy accomplishment in 2008 was passage of the farm bill in June.