Limited Elevator Storage Could Present Problems This Wheat Harvest - Kim Anderson ExplainsWed, 04 May 2016 22:04:45 CDT
OSU Grain Marketing Economist Dr. Kim Anderson says the projected high yields for this year’s wheat crop might not impact price potential, but too much wheat could cause elevators to run out of storage space before harvest is over. He says those storage issues could mean an increased basis at affected locations.
“I’ve talked to a couple of elevators that are already bagging it; they’re already planning on putting it on the ground,” Anderson says. “With that happening and we run out of space, I think that basis is going to go in the tank, and also, they’ll probably insist on buying that wheat now so they can move it on out into the market.”
In light of the current low wheat prices, Anderson says significantly higher yields will ultimately benefit producers.
“Prices were already down, so the more wheat you have to sell, I think the better off our producers are going to be,” he says. “But they’re going to have to get through harvest and through finding a home for all of this product.”
While Anderson usually recommends selling crops by thirds - one third at harvest, one-third in September or October and the final third in November or December - he says producers may want to consider an alternative strategy this year.
“I think this year is looking like a year to maybe sell a little less at harvest. If you can afford it, I would say this is the year to store it,” Anderson says. “I think there’s potential higher prices once you get out into the August, September, October, November time period.”
Anderson recalls the $6 price move within a seven month time period in 2010 and the $3 price move in 2012 and says that if something like that is going to happen it will be in the later part of the year.
“I would probably lower that third, third and third to maybe a fifth -15-20 percent - enough to get you some operating money at harvest,” he says. “And then store down to the fall.”
Ron Hays caught up with Anderson at the Oklahoma Grain and Feed Association Meeting in Oklahoma City on Wednesday. Click on the LISTEN BAR below to hear the full interview.
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