10/31/08 The cost-price squeeze

Washington Ag October 31, 2008 A third-quarter Knowledge Center Market Snapshot from Northwest Farm Credit Services says field reports suggest the 2008 Northwest wheat crop is moving atypically slow. Farmers are holding onto their crop, with many remembering early sales in 2007 at the expense of higher prices as the marketing year progressed. The Market Snapshot says producers' optimism though is countered by a softening wheat market. Indeed, soft white wheat prices have fallen from over $15 dollars a bushel in January of this year to under $5 dollars currently. Washington State University agricultural economist Douglas Young says this puts growers back into an all too familiar situation. Young: "As a group I would say that farmers are entering into the old price-cost squeeze right now compared to where we were in 2007 and the early months of 2008. Again the reason is because of the precipitous drop of soft white wheat prices and the sticky nature of the input prices. Input prices tend to stay up while the price of wheat has dropped to a greater extent in percentage terms than any time during my career." And that's a 40 year career. I'm Bob Hoff.