OSU's Kim Anderson Says Record World Wheat Production Puts the Squeeze on Oklahoma PricesThu, 18 Feb 2016 19:32:44 CST
World wheat production has a big impact on the local elevator price. On this weekend's edition of SUNUP, Oklahoma State University Grain Marketing Specialist Kim Anderson said the United States only accounted for 7.6 percent of the worldís wheat production this past year, so world wheat production remains significantly more important in determining U.S. wheat prices.
World wheat production has set new records for the past three straight years. Anderson said this past year production totaled 27 billion bushels. The past three consecutive years have been above 26 billion bushels. Meanwhile, production has exceeded use the past three years. World wheat use or consumption this past year was at a record 26.1 billion bushels. That leaves 900 million bushels. Anderson said over the past five years production has exceed consumption by 300 million bushels on average.
Record wheat production has put global wheat prices on a downward trend since February 2013. Anderson said prices have been trading sideways since August 2015 with prices trading between $4.40 and $5.21. That has current cash prices below $4 a bushel across much of Oklahoma with prices ranging from $3.80 - $4.10.
In looking at harvest prices, Anderson said the July Kansas City wheat futures contract is around $4.70 to $4.75. With basis around 60 cents, thatís gets harvest prices around $4.15 to $4.35. Anderson said thatís well below the cost of production. Depending on figures used for the cost of land, he said the cost of production is running around $4.15 to $5.15. He said that does not include the fixed cost of production, which will run expenses significantly higher than those levels.
Anderson predicts world wheat production in 2016 will be lower than last year, but the unknown will be how much lower. He predicts world wheat production will need to be down 1.5 billion to two billion bushels for prices to move higher. That means world wheat production has to be at or below 25 billion bushels or two billion bushels lower than last year.
This week on SUNUP, Paul Weckler has advice for checking a home or farm for earthquake damage.
- Does changing a heiferís location impact its breeding cycle? Glenn Selk explains, in Cow-Calf Corner.
- Then, Kim Anderson analyzes the gap between the price of wheat and the cost of producing it.
- In the Mesonet report, Al Sutherland says there is still moisture in the soil, but plants are dry and burn easily, Gary McManus also shows us how close Oklahoma is returning to drought conditions.
- Scott Frazier demonstrates how researchers are measuring the flow of irrigation pivots in Western Oklahoma and the Panhandle. He also tells us about the Oklahoma Irrigation Conference.
- You may have received chocolate for Valentineís Day. Can it be good for you? Nurhan Dunford has the answer in Food Whys.
- Finally, Marley Beem has advice for controlling duckweed in ponds, when we revisit one of our favorite Naturally Speaking segments.
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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