Anderson Watching Global Uncertainity In MarketsThu, 16 Oct 2014 16:53:55 CDT
Wheat prices have turned around in recent weeks. There has been a 40 - 45 cent price increase from the bottom of the market. On this weekend's edition of SUNUP, Oklahoma State University Grain Marketing Economist Dr. Kim Anderson offers his outlook for wheat prices.
"If you look at the December Kansas City wheat contract it's challenging the $6 dollar level, Anderson said. "Remember when it was down at $5.50, we said if it stays there we may challenge the $6. We got to $6. If it breaks $6 we'll go to $6.20. I think a good reason of that is last week's WASDE report. They lowered the ending stocks for wheat from to 698 million bushels to 654 million and I think that's significant."
There has been a little rally in the corn market as well. Anderson tells Lyndall Stout that analysts are equally divided as to whether the market has reached its bottom. The big unknown is the size of this year's corn crop. Corn harvest is behind schedule, which is a concern for Anderson. The latest US Department of Agriculture report, the national corn yield average was raised to 174.2 bushels per acre and some analysis think it could go higher to 176 bushels an acre. USDA also lowered the number of harvested acres from 83.8 million to 83.1 million acres. Anderson said traders will be watching how USDA will adjust the national yield average and number of harvested acre in the November crop production report.
Having lower grain prices are favorable news for cattle producers. With uncertainty as to where prices might go, Anderson recommends producers forward contract their feed.
"I think there is some probability at least 45 or 50 percent that prices are going to go up from this point," Anderson said. "If you can't afford higher prices, I would forward contract my at least winter needs, if not into next spring."
In determining where commodity prices could go, Anderson is watching a lot of global factors with the uncertainty with the concern of an Ebola outbreak, the mass exit of investments into commodities or securities. Anderson said $100 billion dollars has moved out of the commodity market in the last six months to a year and that money is out there looking for a place to go and that could impact commodity prices. He's also watching the debt in China for their manufactures and individuals. In 2005, one dollar of debt created 90 cents worth of GDP. Last year a dollar of debt only increased GDP by 27 cents. Anderson said that is the same level Japan had in the early 1990's before their economy collapsed and the United States in 2007. Anderson is watching China closely because they are a big buyer and can effect commodity prices.
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 visit OSUís North Range to learn from Dave Lalman and Randy Taylor about a unique pasture sprayer.
-In the Mesonet report, Al Sutherland invites viewers to the National Weather Festival in Norman Nov. 1. He also looks at how recent rains improved conditions in Oklahoma and whether the moisture helped the drought situation.
-Next, Kim Anderson analyzes wheat and corn prices, and several U.S. and global factors currently impacting the market.
-In Cow-Calf Corner, Glenn Selk guides producers on establishing cow-to-bull ratios for the upcoming breeding season.
-Then, we tag along with a group of 4-H'ers for a rocket launch and talk with with Jeff Sallee, Kevin Allen and Steve Marks about 4-H National Youth Science Day.
-Jody Campiche discusses options for farm bill commodity program decisions and looks at the next set of enrollment deadlines.
-Finally, as a new livestock showing season gears up, we travel to Muskogee County for the Be a Champ Show Cattle & Lamb Camp. Rusty Gosz explains how youth livestock programs benefit the industry.
Saturdays at 7:30 a.m. & Sundays at 6 a.m. on OETA-TV
Catch SUNUP online through the OSU website by clicking here or through YouTube by clicking here.
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