Have Wheat Prices Bottomed? Kim Anderson Says We Won't Know Until Southern Harvest is DoneThu, 30 Aug 2018 16:10:34 CDT
Wheat prices are again on the decline this week as OSU Extension Grain Market Economist Dr. Kim Anderson joins SUNUP for another grain market report. Anderson attributes this downward movement in the market to two things- Russia’s frontloaded export sales this year that have flooded the global marketplace and a two million bushel increase in the US spring wheat harvest.
Anderson says the extra spring wheat will be used to blend low-quality HRW, which saw lower production this year. By doing this, more wheat stocks will be available for the market which has resulted in increased supply pressure that has translated into decreased prices.
At this point, Anderson is hoping that prices have bottomed out, but says we won’t know that for sure until we get our arms around harvest in the Southern Hemisphere. Early reports suggest that Argentina’s crop is up approximately 55 million bushels from last year and Australia’s is down 54 million, effectively cancelling each other out from a production standpoint.
All indications right now suggest that we will use significantly more than we will produce this year, which means much like this year, 2019 will likely be subject to another shortage of high-protein wheat. Anderson believes if this is true and we enter next year’s harvest short on protein, then there will be strong demand for quality wheat, which he says could potentially float prices up to $5.00 to $5.50.
For producers with grain the bin currently, though, Anderson advises those that can risk slightly lower prices to maybe consider holding on to what they have for a little while to see if Russia caps its exports for the year. If so, that will bump prices here at home. However, if you have already elected to use the strategy of thirds, he recommends sticking to the plan.
You can watch their visit tomorrow or Sunday on SUNUP- but you can hear Kim's comments right now by clicking on the LISTEN BAR below.
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