Russia’s wheat woes could help Montana farmers

While the initial news of Russia's plan to ban further exportation of wheat this year had the markets in a buzz and farmers looking at increasing prices with an exceptional yield, what the long-range impact will be still is unknown.

Chris Herring, general manager of ADM/ CHS LLC in Havre, said this morning that news Friday following Thursday's announcement of Russia's export ban already pushed wheat prices back down a bit. Until the final amount of Russia's harvest is known, there is no way to say what the prices will be.

"It's hard to say 'til they put the pencil to paper," he said.

Russia announced Thursday that it would ban exports of wheat, wheat flour, barley, corn and rye from Aug. 15 through Dec. 31 due to extreme drought and wildfires. The country made the announcement that it would cut exports in order to keep enough grain and reserves for its own citizens.

Herring said that Friday Russia amended that, delaying the ban until Sept. 1, when the country's harvest should be complete and tallied.

That pushed the market back down Friday, erasing 60-cent-per-bushel gains seen Thursday, he said.

Mike Zook, executive director of Hill County's Farm Service Agency office, said local farmers are watching the impact on the market.

"The farmers feel a lot of compassion for the people suffering losses in Russia right now, but, on the other hand, it is impacting our market in a positive way," he said.

Jerry Hybner of Rudyard said any price increase is welcome.

"When it goes up, that's what you like, that's for sure," he said.

Hybner said his family is out harvesting their land right now, at least what was not severely damaged by hail a few weeks ago.

"They are cutting the stuff that wasn't hailed, and it's doing good," he said.

Jerry Hybner's son Terry Hybner, who gave an interview while he was back in from combining to pick up some parts, said the hail damaged probably 75 percent of their crop. While the Hybners are harvesting what wasn't hit, a neighbor has been getting five bushels to 20 bushels off each acre that was hit, he said.

That's down from the 40 bushels to 50 bushels that should be coming in, he added.

Herring said the winter wheat harvest is getting into full swing this week, with spring wheat likely to be ripe in another seven to 10 days.

There have been other problems with the wheat being damaged.

Herring said the most hail damage was in western Hill County, although other areas in the region also have been hit. A more widespread problem could be with crops being lodged due to high winds and rain.

Zook said that crops that weren't damaged are looking very good, even possibly giving record yields.

"I think there's some potential for that," he said.

Terry Hybner said the drought in Russia, leading the country to save its wheat for its own citizens, is not likely to produce a long-term price increase.

He added that the market has gone up about 50 cents a bushel in the last few weeks.

With Australia looking to have its first good crop after years of drought, and wheat still coming in from Europe, the situation in Russia may not have a major impact on prices, he said.

"There's still a lot of wheat in the world," Hybner said. "In the short term, I think it will help the grain market." Jeff Van Pevenage of Great Falls, vice president and general manager of Columbia Grain, said he believes the impact is more likely to be on demand rather than price. Much of what is being seen in the markets is in futures, with speculators driving the prices up.

The basis price for wheat is not jumping up like the futures price, which Van Pevenage said could indicate that the futures price is outstripping the actual demand.

"I expect the markets to be very volatile going forward," he said.

What the lack of Russian imports probably will do, Van Pevenage said, is increase the amount of exports by the United States.

That also could increase shipping costs. Van Pevenage said that, with good corn and soybean crops as well as good wheat crops, the United States shipping and exporting facilities probably will be running at capacity.

"Everybody's going to be fighting to get their crops out," he said.