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OSU's Kim Anderson Responds to Latest USDA Model Projections for '18/'19 Wheat Marketing Year

Fri, 23 Feb 2018 14:41:07 CST

OSU's Kim Anderson Responds to Latest USDA Model Projections for '18/'19 Wheat Marketing Year The following is a response to USDA's latest model projections for the 2018/19 marketing year for all wheat, from Dr. Kim Anderson, OSU Extension grain market economist:

The USDA released model projections for the 2018/19 wheat marketing year for all wheat. Key projections were production at 1.839 billion bushels (up 5.6% from 2017/18 and 10.6% below the 5-year average), ending stocks of 931 million bushels (down 7.8% from 2017/18 and 4% above the 5-year average). The 2018/19 average annual price was projected to be $4.70 compared to the projected 2017/18 price of $4.60.

Between June 1, 2107 and December 31, 2107, U.S. wheat prices averaged $4.64 and Oklahoma wheat prices averaged $3.66 (U.S. 98 cents greater than Oklahoma). During the months of August through December 2017, the U.S. average price was $4.67 compared to Oklahoma’s $3.43. Oklahoma’s average price was $1.24 less the then the U.S. average price.

For the 20-year period 1997/98 through 2016/17, Oklahoma prices averaged 10 cents less than U.S. prices. The largest negative average was 64 cents in 2010/11 and the highest positive was 44 cents in 2007/08. The reason 2017/18 Oklahoma wheat prices are averaging 98 cents less than U.S. prices may be relatively low protein.

If Oklahoma’s 2018 wheat has a test weight above 59 pounds and protein above 12 percent, the price spread may decline to near the minus 10 cent average and making Oklahoma’s 2018/19 projected average annual price to be $4.60. Relatively low test weight and/or protein wheat crop could result in the average Oklahoma 2018/19 projected price being $3.70.

Marketing Strategy

A marketing strategy should include determining how much top-dress nitrogen will be applied and, if needed, whether fungicides will be used. From a price standpoint, why lock in a loss or very small profit? Normally, there is a price rally in late March and early April. Any big move in cash prices is not expected until the July through September time period.

Source - Kim Anderson, Oklahoma State University Extension Grain Market Economist



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