Wheat combine

Combines harvest winter wheat on the Polson farm north of Waterville, Wash., in 2016. Prices have increased in recent months, but analysts say they could go down faster than they went up.

SALEM — Wheat hovered near $8 per bushel on the Portland market last week, and experts say they aren’t sure how high prices will go, or for how long.

The increase is partly a reaction to higher corn prices and a tighter wheat supply, said Dan Steiner, grain merchandiser at Morrow County Grain Growers in Boardman.

Soft white wheat prices on Friday, April 30, ranged from $6.65 to $7.90 per bushel on the Portland market.

Farmers generally consider prices above $6 per bushel to be profitable, according to the Washington Grain Commission.

“This market freewheels and so you see tons of volatility,” Steiner said. “Fifteen minutes in this market might mean you get an extra nickel or you lose an extra nickel. It moves that fast.”

At one point, wheat was cheaper as a feed grain than corn. “When you see China buying U.S. wheat to feed to pigs, you know there’s something going on,” he said.

Steiner suspects prices still don’t reflect the full value of the soft white wheat crop.

“I think soft white stocks are tighter than USDA (U.S. Department of Agriculture) thinks that they are, but we’ll see what happens with this coming harvest,” he said.

The corn market rally is the main reason for the higher wheat prices, but old crop wheat stocks are as tight as they’ve ever been, said Byron Behne, senior marketing manager at Northwest Grain Growers in Walla Walla, Washington.

Farmers might still be holding onto old crop because they either don’t need the money or are waiting to hit a “home run” and see if prices go “absolutely crazy,” above $10 per bushel, Behne said.

He thinks the price range will be $6 to $10 per bushel.

“I think the only thing that could undo this bullish market would be a wide outbreak of African swine flu in China that cuts their livestock herds down, so they don’t need to buy all this grain to feed the animals,” he said.

The market is inverted, with nearby contracts higher than deferred contracts. That indicates the market is concerned about new crop supply and demand, said Darin Newsom, an Omaha, Nebraska, market analyst.

“This comes down to acres, production, weather — it takes everything into account, plus there is an expectation we could still see better demand,” Newsom said.

The higher prices will continue as long as supply and demand is bullish, he said. The market hasn’t hit the tipping point yet, where prices get so high that demand shuts down, Newsom said.

“I don’t think we’re there yet, but it’s a real risk when we start talking about prices we haven’t seen in a decade,” he said.

Steiner recommends farmers be an “upscale seller” and not miss opportunities.

”I don’t know how high wheat prices are going to go, but I know these are good values,” he said. “At some point, this thing is going to break, and when it breaks, it could break very hard. It could break faster than it went up.”

He uses an example of a farmer who sells some of his crop at $7 per bushel, the price goes up to $8 per bushel, then falls back to $7 per bushel again.

”Which of those $7 trades do you like the best?” he asked. “They both represent exactly the same value and money. ... That second $7 is going to bother you.”

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