OSU's Kim Anderson Forecasts Oklahoma Wheat Harvest Prices at $4.50Fri, 08 Jan 2016 10:11:57 CST
Grain markets showed little change from Thanksgiving to the start of the New Year. Thatís according to Oklahoma State University Grain Marketing Specialist Kim Anderson. On this weekend's edition of SUNUP, he talks about how wheat prices moved higher in mid-December before falling. On the first trading day of 2016 on Monday, January fourth, he said prices fell 15 cents and have broken some important support levels.
In looking at the 2016 harvest prices, Anderson anticipates prices around $4.75 for the Kansas City wheat July futures contracts. The basis levels in Oklahoma for July delivery are at a minus 40 cents to minus 50 cents. He said that equates to a harvest forward contract price around $4.30, but heís optimistic cash prices will be closer to $4.50. Anderson forecasts a harvest price range of $3.50 to $5.50. For wheat prices to drop to $3.50 will take a large wheat crop, like a U.S. winter wheat crop of 1.4 billion bushels. Anderson said if the U.S. produces 1.5 billion bushels or more that will put pressure on wheat prices. The U.S. all wheat crop averages around 2.1 billion bushels. He said if the U.S. produces 2.2 - 2.3 billion bushels that will also put pressure on prices. For wheat prices to move higher to $5.50, there will have to be a smaller U.S. wheat crop. Anderson said that would require all winter wheat production to be around 1.2 billion bushels and all wheat production at 1.8 - 1.9 billion bushels. In having a large crop and low protein, he said that will also raise basis levels. In looking at global factors, Anderson said the world wheat crop will have to be 26.7 billion bushels or less for prices to get to $5.50. He said production has to be lower than consumption to lower ending stocks.
In looking at break-even costs, Anderson said their enterprise budget estimates out-of-pocket costs of production are ranging from $4.75 - $5.50 a bushel. He recommends farmers wait to lock in prices to see where prices go the next few months. Anderson said the market price canít stay below the cost of production over a long period of time or farmers wonít produce the crop.
Next week, the U.S. Department of Agriculture will release the latest World Agricultural Supply and Demand Estimates (WASDE) report. Anderson doesnít anticipates any surprises in the report. He looks for U.S. ending stocks to be slightly higher, world wheat ending stocks to be slightly higher and wheat acres to be slightly less than a year ago.
SUNUP host Lyndall Stout interviews Anderson. Click or tap on the LISTEN BAR below to listen to the full interview.
This week on SUNUP, we visit with Bob Hunger about rust showing up in Oklahoma wheat fields.
- In the Mesonet report, Al Sutherland shows us most of the state is looking great for soil moisture, and Gary McManus has news about a possible cold and wet outlook for late January.
- Kim Anderson says $4.50 is the sweet spot for the price of Oklahoma wheat at harvest. He analyzes what can make the price go up or down.
- In Cow-Calf Corner, Glenn Selk explains why passive immunity is important in the first 24 hours of a calfís life.
- Derrell Peel says he is watching trade and consumption to see how they could influence cattle markets in 2016.
- We revisit a favorite Naturally Speaking segment, in which Dwayne Elmore explains how timber harvest can impact deer management.
- Finally, we look at what to expect from the second Food To Fork, OSUís massive open online course or MOOC. Enrollment is currently open for OSU credit or non-credit.
Join us for 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 online through the OSU website by clicking here or through YouTube by clicking here.
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