Friday, April 1, 2022
CapitalPress.com 5
Impacts of war, drought bear down on wheat market
By MATTHEW WEAVER
Capital Press
If ports in Ukraine are
still closed come summer,
disruption of the world’s
wheat market could become
“much bigger,” analysts say.
The Ukraine confl ict
remains the biggest factor
impacting global wheat sup-
ply in the short term, said Gro
Intelligence senior research
analyst Will Osnato.
But, he said, countries
having to import more wheat
than usual and drought in
the U.S. will have a bigger
impact on prices later in the
year.
Ukraine’s wheat crop
is entering a key growing
phase. Lack of fi eldwork
and fertilizer applications
could hurt yields, he said.
Ukraine’s farmers would
typically harvest the new
crop in July.
Exports
through
Ukraine’s western border
are estimated at 10% to 15%
of capacity.
The Black Sea region
typically exports 11 million
tons each of wheat and corn,
2.2 million to 3.3 million
tons of sunfl ower oil and 2.2
million tons of barley from
March to June.
Ukraine’s ports are closed.
Russian ports are operating,
but freight rates are “substan-
tially higher,” and it’s diffi cult
to book new cargos, Osnato
and analyst Kelly Goughary
said.
“Wheat will continue to be
the ag bellwether for the Black
Sea confl ict,” Goughary said.
Wheat futures prices are
up 70% to 80% over a year
ago. They said March 8 was
one of the most volatile days
in the history of the wheat
market.
The heightened price reac-
tion to the war comes on the
heels of an already tightening
supply, Goughary said.
Major exporter stocks-
to-use ratios are the tightest
since 2007-2008. On top of
the Black Sea export disrup-
tion, about 22 million tons of
wheat was lost to drought in
North America.
The speakers pointed to
strong demand from China,
the world’s largest wheat
importer. Last year, China
imported more than 10 mil-
lion metric tons, the most in
25 years, and almost double
the amount imported the pre-
vious year.
“This tightened world
stocks further,” Goughary
said.
China’s growing meat
consumption has increased
demand for wheat and other
grains as animal feed.
China is also the world’s
largest wheat producer, at 151
million tons. Current USDA
projections indicate China
will import 9.5 million metric
tons of wheat during the cur-
rent marketing year.
The analysts expect more
demand from other top
importers.
An increase in acreage
elsewhere in the world can’t
solve the supply gap for some
time, they said. More than
75% of the world’s wheat pro-
duction is already planted.
The analysts pointed to
average to below average
growing conditions in the
U.S., EU and China.
India and Australia could
help fi ll the gap. The Euro-
pean Union has only a limited
ability to signifi cantly expand
exports.
U.S. wheat supplies are
available, but freight makes it
cost prohibitive, they said.
“The U.S. has become a
residual supplier of wheat,
only sourced when there is
truly a need or prices are
low enough to encourage
demand,” Goughary said.
The war will dominate the
headlines, but production will
ultimately determine wheat
prices for the next 6 to 12
months, Osnato said.
“It just doesn’t appear
we’re going to be grow-
ing our way out of this high-
price environment in the short
term,” he said.
Demand for seed booms, but
growers face mounting challenges
By SIERRA DAWN McCLAIN
Capital Press
Capital Press File
A record number of feeder cattle were headed into feedlots last month.
Cattle feedlots packed,
lower supplies ahead
By CAROL RYAN DUMAS
Capital Press
Feedlot owners put a
record number of cattle on
feed last February as produc-
ers dealt with dry conditions
and processors were running
at a steady clip.
The number of cattle
placed into large feedlots
totaled nearly 12.2 million,
1.4% above a year earlier and
the highest March 1 inven-
tory since USDA National
Agricultural Statistics Ser-
vice began the reporting
series in 1996.
The placement number
was higher than analysts’
average estimates. It was a
big number but still within
the range of estimates, said
Derrell Peel, extension live-
stock marketing special-
ist with Oklahoma State
University.
Several factors were in
play with the high place-
ments, including dry con-
ditions in the Southern and
Central Plains. Cattle in those
regions have been moving
into feedlots in January and
February, he said.
Some of the higher place-
ments could also have come
from backgrounded cattle up
north, where feed resources
are tight. In addition, high
prices could have pulled cat-
tle out of the country, he said.
“I think producers were
taking advantage of it,” he
said.
Feedlots have seen rel-
atively high placements
during the last fi ve or six
months, he said.
“We’ve been pulling cat-
tle ahead … essentially bor-
rowing against the future,”
he said.
But those numbers will
tighten, he said.
“There’s only so much
cattle out there,” he said.
That’s expected to show
up in signifi cantly tighter
feeder cattle supplies in
April and May, he said.
“I think it will happen in
March,” he said.
Total feeder receipts from
auctions, direct and inter-
net sales for the fi rst three
weeks of March are down
17% year over year, he said.
Feedlots
will
have
plenty of cattle to market
for another few months,
but tighter placements are
ahead, and feedlot produc-
tion will decline in the sec-
ond half of the year, he said.
At 1.82 million head, mar-
ketings of fed cattle in Febru-
ary were up 4.9% year over
year and a bit higher than
analysts’ estimates, he said.
Fed heifer slaughter was
up 4.6% in February year
over year, and beef produc-
tion was up 6.9% from a
year earlier, he said.
The increase in both
placements and marketings
are relative to February of
last year, when a massive
winter storm limited move-
ment of cattle in and out of
feedlots, he said.
“One message there is
that we are moving cattle
well through the system,” he
said.
The industry has had
far fewer packer labor con-
straints compared to Febru-
ary 2021, he said.
“Even though we’ve got
large feedlot numbers, we’re
not backed up in any sense
of the word,” he said.
As for feeder and year-
ling cattle prices, higher
prices are expected due to
tightening supply, he said.
“We will probably see the
highest prices of the year at
the end of the year,” he said.
Feedlots are working
with a limited pool of feed-
ers, and even drought won’t
aff ect prices, he said.
“You can get them sooner
or you can get them later, but
you can’t have them both,”
he said.
If drought conditions per-
sist, calves that normally sell
in the spring and fall could
go to feedlots earlier and
lighter, he said.
“It’s not going to change
pricing very much because
there’s just not many of
them,” he said.
It’s both an exciting
and diffi cult time to be in
the seed industry, experts
say — exciting because
demand is strong and
prices are high, diffi cult
because the supplies and
labor farmers rely on are
increasingly expensive and
in short supply.
Bryan Ostlund, admin-
istrator of several Oregon
commodity commissions,
said seed growers are wor-
ried about rising costs for
just about every input.
“Things have rap-
idly changed,” said Ost-
lund. “These are signifi cant
increases we’re seeing.”
In response, growers are
adapting.
Though many grow-
ers face similar challenges,
specifi cs vary from farm to
farm. Ostlund said that’s
partly because seed grow-
ers tend to sign multi-
year contracts for certain
inputs. He said a grower in
the middle of a multi-year
fuel contract might be rel-
atively “safe,” while one
whose contract expired
right before fuel prices rose
could be in deeper trouble.
An illustration of this is
Kent Burkholder, who runs
a midsized Willamette Val-
ley farm focused on grass
seed.
Burkholder said he was
fortunate to have set up a
three-year contract for farm
diesel in 2020, so he’s pay-
ing only $1.72 per gallon.
Next year, when his con-
tract expires, he expects his
price to jump to $2.13 per
gallon.
“I was fortunate — not
by my planning, but I more
or less just kinda lucked
into it,” he said.
Burkholder was not as
fortunate in other areas.
His fertilizer costs have
Berger International
Becky Berger of Berger International farms 3,200
acres in three counties. Her family farm grows grass
seed and off ers custom seed cleaning and produces
red clover seed, grass straw, hazelnuts, red clover si-
lage and hayage.
climbed steeply. In 2021,
Burkholder said he paid
$475 per ton for urea; in
2022, it’s $1,000 per ton.
Burkholder has changed
his fertilizer mix to some
extent, including buying
cheaper liquid fertilizer
he wouldn’t normally use.
Generally, he has kept fer-
tilizing as usual.
“I haven’t really changed
my practices too much,” he
said. “I know what it takes
to raise a good crop, and
you’re not going to be able
to sell anything if you don’t
have a crop to sell.”
To cut costs, other grow-
ers say they’re applying
less fertilizer.
Becky Berger, of Berger
International, a sixth-gen-
eration Willamette Val-
ley family farm known for
grass seed, said her farm is
being “more conservative
in (its) fertilizer use.”
Freight costs are also
high, but Berger said the
cost of shipping hasn’t
slowed customers from
buying because global seed
inventories are “very tight.”
“Seed is so short in sup-
ply that they’re just happy
if they can get it,” she said.
Berger’s biggest con-
cern is labor — both rising
wages and Oregon’s pend-
ing overtime pay rule.
“That’s honestly impact-
ing my sleep at night,” she
said.
Berger said she doesn’t
have a plan yet for how to
adapt.
Growers also continue
to face supply shortages.
Berger said she’s been
struggling to get polyeth-
ylene bags.
“That’s scary. What do
you put your seed into if you
don’t have bags?” she said.
Burkholder said his
crew has been stocking up
in advance on equipment
parts most likely to break or
wear out — including belts,
disc blades and bearings.
Berger and Burkholder
said they’re also concerned
about global unrest. If the
U.S.-China
relationship
deteriorates, it could hurt
their industry, since China
is their top foreign market.
Despite concerns, seed
growers say they’re glad to
be an in-demand industry.
“I feel really fortu-
nate to rub shoulders with
some smart, really innova-
tive people,” said Berger. “I
think we’ll make it.”
Best Prices on Irrigation Supplies
BOISE PROJECT BOARD
OF CONTROL
Start of 2022 Irrigation Season for
the Boise Project Board of Control
The Boise Project Board of Control serves nearly
167,000 acres. Starting on April 18 th , 2022, the
Project will activate over 460 canals and laterals
in Ada and Canyon Counties. Irrigation delivery
service to our patrons will begin no earlier than April
22 nd , 2022, after the canals have risen to allowable
elevations and the water is ready to be delivered.
Southern Idaho is experiencing drought conditions for
the second year in a row. As a result, the snowpack
in the Boise River basin is substantially lower-than-
normal and reservoir elevations are also lower than
normal. Based on the current water availability
projections, the Boise Project Board of Control has
set the water allotment at this time at 1.20 acre-feet
of water per acre. This allotment amount is subject
to change due to unknown variables in the weather,
future precipitation, and snowmelt runoff.
For more detailed information, please visit our
website at:
www.boiseproject.net
This press release is to further serve as notice
to parents and children alike of the approaching
hazards of water
in the irrigation canals.
If you have any questions, please contact Bob Carter,
Project Manager, at (208) 344-1141.
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