MTPR

Montana Farmers Contend With Wheat Surplus, Low Prices

Aug 10, 2016

The winter wheat harvest is buttoning up and Montana producers expect to see average to above average yields. Great news, right?

Normally yes, but Lola Raska tells us wheat farmers have their backs up against the wall this year.

"Yeah, we’ve been in a price downtrend now for a couple of years and we’re at historic lows right now."

Raska is Executive Vice President of the Montana Grain Growers Association.

"Take for example the Golden Triangle; 11 percent winter wheat is running around $3.10 to $3.15. Two years ago we were up in the $6 and $7 range."

That’s a 50 percent decline and a couple of factors are to blame. For one, Montana spring and winter wheat protein levels dropped in many cases this year.

Chinook-area farmer Randy Hinebauch says those protein levels command top dollar on the international markets.

"That’s why the Japanese and the Asian buyers like our wheat, especially our spring wheat. Any time you have higher protein the quality of your bread goes up. They’re pretty picky about the proteins."

Hinebauch runs an organic farm in Blaine county. He points out that in non-organic wheat crops, protein levels are directly related to nitrogen fertilizers. In other words, the more nitrogen a conventional farmer applies to his or her wheat crop, the better the chances of a bumper yield with acceptable protein. That adds up to more money in pocket.

But it didn’t work out that way for many Montana farmers this year.

Hinebauch blames excessive rainfall.

"Since the first of April we’d had over almost 13 inches of rain. Our normal is probably 4 to 5 inches. A lot of the winter wheat in this area was not fertilized to match the moisture that we’ve had. So, what’s happened is we’ve ended up with a lot of low protein winter wheat."

Even if Montana wheat farmers managed to produce a good high-protein wheat crop, they ran into another big problem.

"There’s too much wheat in the world."

Lola Raska of the Montana Grain Growers Association says farmers all over the world are bringing in bumper wheat crops globally.

"It’s a simple problem of supply and demand. We got too much supply and it’s going to take us a long time to work through this over supply, this glut of wheat in the world."

Exactly how long to work through the oversupply is anyone’s guess, but Raska says Montana producers may want to prepare for the long haul.

"It depends on when the next disaster is. We’re starting to hear some reports now that are not quite as bearish about the price of wheat. France is having some severe production problems. Germany might be having some production problems. We’ve still got wheat in the pipeline though from 2015, so with a good production year in 2016 it’s going to take at least a year or so to work through the supply that we have."

Montana farmer Randy Hinebauch says some of his colleagues in north central Montana are starting to diversify their crops.

"Some of the better operators on the conventional side have done a lot of these pulse crops along with oilseed crops, mustard and canola. If you’re just doing the wheat on wheat on wheat on wheat, I it’s going to be kind of gloomy, I think."