At the recent National Association of Farm Broadcasters conference in Kansas City, Farm Director, KC Sheperd, had the chance to visit with the Grain and Oilseed Analyst at Terrain, Cody Barilla. Sheperd and Barilla talk about a global wheat update.
Barilla said Terrain is a team of research analysts that serve Farm Credit Associations such as American Ag Credit, Farm Credit Services of America, and Frontier Farm Credit.
“We specialize in the portfolio that those farm credits loan against, so there are grain analysts, beef analysts, dairy analysts, and we cover all of the commodities that our farm credits support,” Barilla said.
Regarding Oklahoma’s hard red winter wheat, Barilla said the market has been on a downhill slide since July. Looking at the global fundamentals, Barilla said things are fairly tight.
“When you look at the U.S., even with the short crop we had in Kansas, Oklahoma, the Southern Plains, we still had an uptick in stocks-to-use here in the United States,” Barilla said. “So, if we backtrack a little bit, we had market opportunities through the summer until we hit about that time frame where the grain corridor in Russia and Ukraine when they canceled that safe corridor.”
After a week after the grain corridor was canceled, Barilla said the markets started to go down.
“It doesn’t seem like any news, whether it be Russia attacking a civilian vessel, or Ukraine having a drone strike on a Russian oil tanker,” Barilla said. “It doesn’t seem like any news can rally this market. There might be a quick uptick, but by the day, it is trending lower.”
Barilla said he believes the reason for these lower trends in price is that Russia is setting the floor price of grain.
“When you look at global wheat prices, Russia is trading around $225 per metric ton,” Barilla said. “To put that into perspective, hard red winter wheat exports out of the U.S. are about $300 per metric ton.”
Because of this, Barilla said export numbers are at 52-year lows at the moment.
“We really need to stimulate more business, find customers globally based on quality advantages and consistency advantages,” Barilla said. “When you look at that flat price, we are just not competitive right now.”
Barilla said wheat is a unique commodity because, unlike other commodities such as corn and soybeans, wheat is grown globally, and with winter and spring wheat, harvest around the world is always around the corner.
“This insulates that price a little bit, so that is why the market is not reacting near as strongly to the global stocks to use numbers,” Barilla said.
Although Russia is in the middle of a war, Barilla said wheat production has not slowed down. Barilla added that Ukraine is only off by about 20 percent. Barilla also talked with Sheperd about some upcoming Farm Credit initiatives. Click the listen bar above the story to hear the full conversation!
