Need Help
If you need help setting up services or accessing your accounts, please call our Customer Care Team at 866.552.9172 during business hours (7 a.m. — 5 p.m. PST, M-F) or email us at CustomerCare@AgWestFC.com.
Location
If you need help setting up services or accessing your accounts, please call our Customer Care Team at 866.552.9172 during business hours (7 a.m. — 5 p.m. PST, M-F) or email us at CustomerCare@AgWestFC.com.
Location
If you need help setting up services or accessing your accounts, please call our Customer Care Team at 866.552.9172 during business hours (7 a.m. — 5 p.m. PST, M-F) or email us at CustomerCare@AgWestFC.com.
Securely update and exchange balance sheet information with your AgWest team.
Put your idle cash to work with a suite of banking services that sweeps funds between accounts. Fees apply.
AgWest Farm Credit’s 12-month profitability outlook for small grains and pulse crops suggests slightly profitable returns.
Drivers include a smaller winter wheat crop, geopolitical tensions and forecasted record global production.
12-Month Profitability Outlook
Northwest yields decline, Montana is the exception
Producers are expecting the 2023 winter wheat crop to be the smallest since the record drought in 2021. Most of the regions that grow Soft White Winter (SWW) wheat have experienced significant stress due to warmer than normal conditions and lack of moisture in May. While there were pockets of Washington and Northern Idaho that received rain supporting better yield conditions, most areas missed out. The crop progress report has shown worsening winter wheat conditions since early June, but the report has not yet captured the full extent of deterioration in the Northwest SWW crop. Currently, winter wheat conditions indicate more than 50% of acres are in good or excellent condition, but most producers are concerned about SWW conditions.
The Northwest is expected to produce 69.7 million bushels of winter wheat, down 5% year over year due to fewer planted acres and reduced yield expectations. Washington and Oregon are expected to see large winter wheat yield losses, down 17.6% and 14.7% respectively year over year. Montana is the exception with major improvements in drought conditions from the previous year and winter wheat yields are forecasted to average 44 bushels per acre, up from 33 bushels per acre in 2022. The quality and yield of the 2023 winter wheat crop will largely be driven by weather leading up to harvest.
U.S. Winter Wheat Yields, Bushels and YOY % Change
Source: USDA NASS, June Crop Production.
National wheat conditions remain dire
Nationwide winter wheat conditions have modestly improved during the spring but remain dire overall. Approximately 50% of winter wheat acres remain in drought (a 9% improvement since March 30, 2023) and 40% of winter wheat acres are in poor to very poor condition. The Southern Plains, particularly Kansas, has suffered from the worst crop conditions with only 16% of winter wheat in good or excellent condition on June 20, 2023. Markets were optimistic that April and May rains would benefit the Southern Plains winter wheat production, but the impact is likely overstated as numerous producers in this region have already decided to remove wheat and replant corn or soybeans. The USDA forecasts hard red winter and white winter wheat production will decline by 3% and 11% year over year, respectively. This will be the smallest hard red winter crop in 65 years.
Forecasted record global wheat production
The global wheat market has undergone a significant shift in the last year due to geopolitical instability, rising inflation, changing weather patterns and volatility. Despite these challenges, global wheat production is forecasted to set a record of over 800 million tons produced in 2023. Last year, Australia had a record wheat crop, which flooded the global market and suppressed prices. This year, improvements in the European and Russian crop has bolstered the global production outlook. Record global production does not bode well for U.S. wheat exports. While the U.S. exports the highest-quality wheat, it is also one of the most expensive. Countries are only willing to pay a premium up to a certain point for U.S. wheat. Strong global production will put downward pressure on global and U.S. wheat prices. However, weather still poses the greatest risk to global production, and any significant weather challenges to major wheat exporting areas could have a bullish influence on world prices.
Wheat growers’ profitability will face headwinds. New crop prices are barely at break-even levels for most growers. Fewer planted acres and poor yields will likely not be enough for price improvements as increased global production will pressure prices to remain low. Since 2022 peaks, the average Northwest wheat price has fallen $3.13 per bushel to $7.50 per bushel while production costs are $6 - $7 per bushel. Producers’ costs have impacted every aspect of the wheat industry. While some prices like fertilizer and fuel are lower than 2022 (see Crop Inputs Snapshot), overall operational costs remain high for wheat producers. There is still a significant amount of 2022 grain in storage, and interest costs and storage fees are eroding already slim margins. For the 2023 crop, producers with crop insurance will fare best. Regions experiencing poor winter wheat conditions will rely heavily on crop insurance to protect producers’ profits. Producers selling on the cash market should create a marketing plan that includes a pricing target and exit strategy based on anticipated costs to avoid the regret some producers felt in 2022 for not selling grain sooner.
AgWest Business Management Center
Merchants Exchange of Portland, Oregon
National Grain and Feed Association
Pacific Northwest Grain and Feed Association
USDA – U.S. Department of Agriculture
USDA National Agricultural Statistics Service
USDA Weekly Weather and Crop Bulletin
View the latest AgWest Small Grains Industry Perspective
Learn moreAgWest supports customers with a wide range of industry and business management resources
Learn more