Anderson Says Wheat and Corn Markets DivergeFri, 05 Sep 2014 11:09:01 CDT
Corn prices are at the lowest level since 2010 and wheat prices are trending that way. Many producers wonder if the prices are tied together. Oklahoma State University Grain Marketing Economist Dr. Kim Anderson tells Lyndall Stout on this week's SUNUP about how the corn and wheat markets have had a similar downward fall.
Corn stocks were extremely tight in 2011, 2012 and 2013. Anderson said corn prices set a floor for wheat prices and the prices were married. Corn prices peaked in August of 2012 at $8.40 a bushel. Right now the Chicago corn December contract is about $3.50. That's a 58 percent price decline in corn prices. Wheat prices have declined as well. Wheat prices peaked out in February 2011 at $9.90 . Currently the December Kansas City wheat contract is about $6.15, which is 37 percent price decline.
"Yes they both have come down, but they have come down in different time periods and different percentages with corn coming down dramatically more than wheat has," Anderson said. "So they are divorced right now, they are attached a little but, they track mostly separately."
In looking at the market outlook, Anderson doesn't believe this market has bottomed out yet. Anderson anticipates the corn market will continue to go lower. He said how much the market will decline depends on how this crop finishes out. The US Department of Agriculture has estimated the crop will average 167.4 bushels per acre, about 14 billion bushels. Allendale is forecasting the crop will average 174 bushels per acre with total production at 14.6 billion bushels.
"Right now the market is probably trading about 171 bushels," Anderson said. "If Allendale is right and they are higher then 171 or 172 (bpa), then I think prices are going maybe 20 cents lower."
Anderson believes the wheat market has nearly hit the bottom of the market. Right now cash prices in central Oklahoma bottomed out at $5.85. The December Kansas Wheat contract is $6.60. Anderson said the support is at $6, that's 20 cents lower. Anderson believes another 20 cents could drop 20 cents lower, but this next week will be very key. Overall he believes the market is near the bottom for both wheat and corn.
In marketing corn and wheat, Anderson recommends if farmers can't handle 20 lower prices, then they should be selling it by staggering it over the market. With corn, Anderson doesn't think there is much up side potential, but there is downside risk in the market. For livestock producers, Anderson recommends forward contracting some feed. He thinks soybean prices could come down some more, so producers may want to wait for that.
You can see their full conversation on SUNUP this weekend on OETA across the state of Oklahoma- or you can listen to Dr. Anderson's current wheat market analysis right now by clicking LISTEN BAR at the bottom of this article.
This week on SUNUP, we discuss with Megan Rolf and Sara Place a unique research project underway on cattle water efficiency.
-In the Mesonet report, Al Sutherland and Gary McManus recap August rainfall amounts, current soil temperatures and the latest drought monitor.
-Brian Pugh has an update on the progress of Oklahoma's soybean crop.
-In Cow-Calf Corner, Glenn Selk looks at the importance of colostrum to newborn calves.
-Kim Anderson analyzes declines in corn and wheat prices.
-In Shop Stop, Randy Taylor and Wayne Kiner offer a handy tip to ensure a replacement motor matches the original.
-Next, Derrell Peel has advice on herd management decisions amid record cattle prices.
-In Food Whys, Tim Bowser explains why potato chip bags and other food packages contains air.
-Finally, we catch up with Brittany Krehbiel, a young woman and wheat farmer from Caddo County, as she begins her studies in the College of Agricultural Sciences and Natural Resources.
Catch SUNUP Saturdays at 7:30 a.m. & Sundays at 6 a.m. on OETA-TV
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