Kim Anderson Analyzes Grain Stocks on SUNUP this weekendThu, 26 Jun 2014 16:02:24 CDT
Just head of the quarterly grain stocks report from the US Department of Agriculture, Oklahoma State University Grain Marketing Specialist Kim Anderson makes his forecasts on this week’s preview of Saturday’s SUNUP program.
Overall US corn and wheat stocks are relatively tight. Anderson says you can go back to 2012-2013 marketing year corn ended with 718 million bushels, the 2013-2014 year ended with 583 million bushels and next year it projected to be 574 million bushels.
With hard red winter wheat 2012-2013 marketing year ended with 343 million, down 200 million bushels this year and Anderson says next year its forecasted the US will end with 175-180 million bushels in ending stocks.
Both US corn and wheat ending stocks are well-below the historical averages for the US. With the tight supplies, it would be expected that prices would be higher, but Anderson explains why that isn't always the case.
"If you look at the average annual prices for the 2012-2013 marketing year $7.77, it fell to about $6.97 for this year," Anderson said. "And this next year the price range is $6.35 - $7.65, which means prices with lower stocks are expected to be about the same as they were last year."
Anderson says Oklahoma prices look to average between $7.45 - $6.98, which is around that average or slightly lower for this year.
To understand the supply and demand factors that are effecting prices, Anderson says you need to take a look at the global grains stocks. While domestic ending stocks are declining, world ending stocks have been going up.
The US also has less position in the world situation today. This year US wheat production is projected to be 7.5 percent of world production. Twenty years ago in 1994-1995 marketing year, the US made up 12 percent of the world's wheat production. This year US exports will total 17 percent of the world exports, while in the 1994 - 1995 marketing year the US made up 32 percent of the world's exports.
"So we're a lot smaller player, less than half of the percentage of exports as we had 20 years ago, so we don't have as much market power," Anderson said. "We don't have as much impact on prices as we we had 20 years ago."
In marketing the 2014 wheat crop, the average price is about $6.50/bushel. Anderson says there is a lot of violability in that the price will not be determined in the US, as prices will determined by world production.
Anderson recommends farmers stagger their marketing plan by marketing a third at harvest, a third in September-October and the final third in November or December or some strategy spread out marketing over the near term.
Click on the LISTEN BAR below to hear Kim Anderson's full report, as produced by Oklahoma State University's Ag Communications Department.
Catch SUNUP online through the OSU website or through YouTube.
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