Dr. Kim Anderson Reveals the Biggest Mistake Wheat Farmers Could Make Right NowThu, 01 Sep 2016 16:52:19 CDT
Oklahoma State University Extension Grains Market Analyst Dr. Kim Anderson recently released his latest analysis on the current outlook of the wheat market in Oklahoma. He shares his findings with Radio Oklahoma Network below and offers strategy advice for producers marketing their grain.
"World wheat ending stocks are projected to be a record 9.3 billion bushels. For wheat prices to be above $5, world wheat ending stocks need to be less than eight billion bushels. This implies that 2017/18 world wheat marketing year production needs to be less than 25 billion bushels compared to a projected 27.3 billion bushels in 2016/17.
"A good example of the world's excess of wheat is Oklahoma's wheat in storage. Oklahoma grain handlers may be storing 10 million bushels of wheat in temporary bunkers and bags. On June 1, 2015, the USDA estimated Oklahoma off-farm stored wheat to be about 40 million bushels. Oklahoma wheat production in 2015 was 98.8 million bushels. On June 1, 2016, the USDA estimated off-farm stored wheat to be 70 million bushels (a 30-million-bushel increase).
"The 2016 Oklahoma wheat crop is estimated to be 132 million bushels. If a 100-million-bushel crop resulted in an additional 30 million bushels in storage, how much will 132 million bushels production increase off-farm storage of wheat? With no change in demand, off-farm stored wheat would increase to 132 (70 + 62) million bushels on June 1, 2017.
"Between now and harvest, Oklahoma wheat prices could be as low as $2 or as high as $3.50. The good news is that as long as the cash price is below the loan rate, the cash price plus the LDP will change very little. The biggest mistake producers can make is to take the LDP without selling their wheat."
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