Anderson Outlines Wheat Producer Options for 2015Tue, 26 Aug 2014 17:51:51 CDT
With the 2014 wheat crop in the bin, farmers are contemplating what to with their marketing plan. Radio Oklahoma Ag Network Farm News Director Ron Hays caught up with Oklahoma State University Extension Grain Marketing Economist Kim Anderson at the recent Ag Weather Symposium in Norman. Click on the LISTEN BAR below to hear the full interview.
Anderson said he is feeling good about current wheat prices, not because of the level, but because that Kansas City September and December contracts have remained up that important $6 dollar level.
"They have given all indications that we created a floor with the massive world stocks, record world production," Anderson said. "I don't think we're going to go very much higher, but right now it looks better for sideways moving to slightly higher prices than it does lower prices."
"So I am semi-optimistic not for a big move, but for some move up, rather than a big move down," he said.
Right now there is increasing foreign and world wheat stocks and record world production. Anderson said even with increasing consumption, world stocks will continue to build. He said there are more than adequate stocks in other major wheat production countries like Ukraine, Russia, Australia, Kazakhstan and Argentina.
In looking at the coming year, farmers may look at their alternatives like putting stocker calves on wheat instead of harvesting the crop. Anderson said that option is looking favorable because with increasing world stocks, he is forecasting wheat prices for June 2015 to be $5.50 - $5.80 a bushel.
"So you are looking at a below average wheat price, so you're looking at below average wheat income depending on your yields, where the cattle right now look relatively good," Anderson said. "Even though I am a crops guy, the stocker deal may look a little better than going for wheat."
Anderson though cautious producers because the situation can change quickly. Global wheat stocks are slightly above average, but not well above average,so he cautions producers that situation could turn around quickly.
"I think what producers have to decide is, am I a cattle producer or am I crop producer?" Anderson said. "If I am crop producer then I am going to concentrate on my wheat and get my yields high and my costs low, if I am stocker person and a cattlemen then I am going to go with cattle."
"I don't think you should change, jump in and out of a enterprise from year to year because it takes different management practices and producers can make what they enjoy doing work I believe and have the highest return and profit from that," Anderson said.
However, Anderson will advocate for rotating wheat with canola. Back in 1990 he served as diplomat in the USSR for the winter grains tour, where he learned the Russian and Ukraine farmers don't monocrop wheat because they can increase yield and quality through crop rotation. Anderson said finally Oklahoma has a crop to rotate with canola.
"I have been a proponent since I have been in this job since 1982 on trying to clean up our wheat to lower the dockage, to lower the foreign material in it, so we'll have good demand and a good quality milling wheat....rotating with canola allows us to do that," Anderson said. "Our numbers, our budgets tell us it yields a higher profit over time when you crop rotate and you have a better product."
"To me that's a no brainer, crop rotation works," he said.
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