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Agricultural News

OSU's Kim Anderson Reviews WASDE Report and Calls '16 Critical Time to Produce Quality Wheat

Thu, 14 Jan 2016 17:02:12 CST

OSU's Kim Anderson Reviews WASDE Report and Calls '16 Critical Time to Produce Quality Wheat Stocks and planted acres were the key highlights of this week’s World Agricultural Supply and Demand Estimates (WASDE) report from the U.S. Department of Agriculture. In this weekend's edition of SUNUP, Oklahoma State University Grain Marketing Specialist Kim Anderson said the quarterly stocks and the ending stocks came out 2.4 percent above trade expectations, which is negative for prices. In looking at the planted acres for the 2016 crop, he said all-wheat acres were 7.2 percent above last year and 6.8 percent above trade expectations. He said hard red winter wheat acres were 8.6 percent below last year and 7.7 percent above trade expectations. Soft red winter wheat acres were 6.7 percent below last year and 5.2 percent below trade expectations. After the WASDE report came out Tuesday, wheat prices made double digit gains because of the lower planted acres.

SUNUP host Dave Deken asks how low can the price of wheat go? Anderson said the bottom of the market was seen in 2007, 2009 and 2010 with prices around $4.30 a bushel. Kansas City wheat futures prices have been around $4.50 and the Chicago soft red winter wheat contract has gotten down to $4.20. In looking at the futures market for both soft and hard red winter wheat, Anderson said he doesn’t look for prices to get any lower than $4.25. With large production and low quality, basis levels could weaken to 75 cents. He said the lowest possible cash price would be around $3.30 - $3.40 a bushel.

Deken also asks Anderson when wheat prices will begin ratcheting upwards versus getting only small rallies. Anderson said wheat prices will increase after losing a world crop, as world wheat production trumps U.S. production. He said that means having world production below 25.7 billion bushels and U.S. production below 1.9 billion bushels.

With lower prices, farmers will look at reducing planted acres and production expenses. Anderson thinks there will fewer planted wheat acres in almost every country around the world. The exception might be Argentina because they have eliminated their 25 percent export taxes for wheat, so their prices are higher. He said right now is a critical time for hard red winter and soft red winter wheat quality to be above average. U.S. farmers need to be producing good milling exportable wheat in 2016, otherwise basis could go in the tank. If the U.S. produces a large low quality crop, Anderson said wheat prices are going to drop below $4, down into that $3.50-$3.60 range. He said now is not the time to cut back on inputs, as farmers need to produce a milling quality wheat.

Catch SUNUP: Saturdays at 7:30 a.m. & Sundays at 6 a.m. on OETA-TV

SUNUP can be seen on OETA across the state of Oklahoma- Dr. Anderson's segment on the markets is one of the standard features of this weekly show from Oklahoma State University. Catch SUNUP on-line through the OSU website by clicking here or through YouTube by clicking here.


SUNUP host Dave Deken interviews OSU's Kim Anderson
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