Maybe Seven Dollar Wheat Makes Sense- So says Dr. Kim Anderson of OSUTue, 04 Jan 2011 6:42:38 CST
Oklahoma State University Extension Grain Marketing Economist Dr. Kim Anderson says that he has reviewed how the market is pricing wheat as we begin 2011- and perhaps his earlier ideas that the market is in "bubble mode" is not necessarily true.
In focusing on the global and US supplies of wheat- we are above the historical average in the number of bushels we have on hand- but Dr. Anderson says you can't look at the supply situation in a vaccum. You must also consider useage. And consumption of wheat globally has been growing. In fact, over a five year period dating back to 2006, our consumption is 1.8 billion bushels above the historical average. Consumption has grown significantly for wheat- and that seems to give credibility to the market pushing Kansas City wheat futures close to nine dollars- and cash wheat prices back at the farmgate in Oklahoma in the seven dollar to seven- fifty neighborhood.
On his marketing website, Dr. Anderson writes "Because of increased demand, wheat stocks may be tighter than the comparison of the five-year average and current ending stocks estimate implies. The five-year average annual (2006/10) wheat price is $5.50 compared to $3.31 for 2001/05 and $3.09 for 1996/00. Higher prices due to increased demand may be justifiable."
Lyndall Stout of SUNUP did a special interview with Kim as the New Year has begun- and we have the audio of that for you by clicking on the LISEN BAR below.
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