Low Wheat Prices has Anderson Encouraging Farmers to Consider Their OptionsWed, 19 Aug 2015 17:04:23 CDT
Wheat prices have been on downward slide since harvest and the outlook doesn't look that much better. Oklahoma State University Grain Marketing Specialist Kim Anderson wishes he recommended more farmers sell their crop at harvest, as prices have dropped 50 to 60 cents since June. That drop in prices has been attributed to surplus global supplies of wheat. Anderson said nearly every report from Europe, Germany, France, Russia, Ukraine and others has indicated more wheat will be harvested this year and the quality looks to be relatively good.
"Right now with the world projections for a record wheat crop, there's just not much hope on wheat price," Anderson said. "It looks like the market maybe building a bottom, but we've got a strong down trend and it's going to be difficult to break that."
The large global wheat supplies means lower exports for U.S. hard red winter wheat. The U.S. crop has some quality challenges with variable test weights and protein levels. The situation has been compounded by the strength of the U.S. dollar, that makes U.S. commodities more expensive relative to other countries. Anderson said Russia and Ukraine are undercutting the world market and their prices are significantly lower than U.S. wheat prices. Russia and Ukraine also have a significant transportation advantage in shipping to southeast Asia and northern Africa.
"That's hurting our exports and that's hurting our prices," Anderson said.
Radio Oklahoma Ag Network Farm Director Ron Hays interviewed Anderson during the Oklahoma Wheat Review held on Tuesday at Redlands Community College in El Reno. Click or tap on the LISTENBAR below for the full conversation.
The lower price outlook may also impact Oklahoma planting decisions this fall. Farmers may look at planting their wheat crop earlier, in order to grow a crop for grazing and grain production. In visiting with one farmer that grows wheat, sorghum, soybeans and corn, Anderson said this farmer has broken even at best with his wheat crop for the past two or three years. This farmer has done better with his summer crops, especially those that are not double cropped. Anderson thinks it is very important that producers compare their options in growing wheat versus other crops.
Another option would be planting canola. Anderson said that crops has its own challenges with prices dropping to around $6.50 with essentially one buyer and one processor. Anderson likes the wheat-canola rotation to clean up rye and weed problems.
"Producers have some tough decisions and the way to make those decisions is to do some research, get out that pencil and calculator and do some hard number crunching," Anderson said.
Anderson recommends farmers work with agronomists, plant soil scientists and ag economists to calculate the profitability on each potential grain or crop option.
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