Wheat farmers report big yield, low prices
Though Montana's wheat farmers are reporting a large harvest this year, producers aren't reaping many profits due to low prices.
Winter wheat values dropped as low as US$2.16 a bushel this year, meaning many Montana farmers will lose money on grain.
According to figures from the Chicago Board of Trade, for the past two years United States wheat prices have been below US$5 a bushel and slipped to below US$4 a bushel this year, a far cry from the almost US$9 a bushel earned between 2011 and 2014.
"From a financial perspective, the cost of production has not gone down nearly as much as the price of grain," Adrian Doucette, president of Stockman Bank for northcentral Montana, told the Great Falls Tribune. Stockman Bank is Montana's largest private agricultural lending institution.
The drop in price comes as wheat production continues to outpace demands. The US Department of Agriculture reports that global stocks of wheat will exceed international demand by more than a quarter of a billion tons this year.
"Texas, Kansas, Oklahoma, South Dakota, Minnesota all the main wheat states in that area produced the same yield: 70, 80, 90 bushels on dry land with seven per cent protein," said Alan Merrill, president of the Montana Farmers Union. "The low-protein wheat is around everywhere in the United States, and you can't sell it. A lot of the elevators are not offering anything at all for low-protein wheat."
In Montana, areas that received good rainfall are seeing huge yields, making up slightly for the low prices. On the Highwood bench in central Montana, farmers are cutting as many as 177 bushels an acre.
The 2016 Montana crop may be only the third harvest in a decade to be valued at less than US$1 billion. Lola Raska, of the Montana Grain Growers Association, said part of that is because farmers don't have other options. Though Montana's beer crop saw a 40,000-acre increase, the merger between beer giants AB InBev and SABMiller has reduced the number of barley contracts available.
"It's tough for Montana farmers to fix the situation because we don't have a lot of options," Raska told the Billings Gazette.