Now is a Good Time to Take a Look at This Year's Wheat Discounts - Kim Anderson ExplainsThu, 23 Jun 2016 23:44:06 CDT
With most of the 2016 Oklahoma wheat crop in the bin, OSU Extension Grain Market Economist Dr. Kim Anderson says producers are mostly likely keeping a close eye on prices and wondering how those prices are going to change between now and the end of the year.
Since 2008, June wheat prices have averaged right around $6/bushel. Anderson says with current prices well below $5/bushel, many producers are left in the red after factoring in production costs.
He says that while the December KC contract is $.40 higher than the July contract, it isn’t necessarily good news for producers.
“Kinda promises a $.40 price increase, but if you’ll look back over the last few contracts that’s went off the board, those contracts have come down, rather than what we call the ‘nearby contracts’ going up,” he says. “So they’ve lost that carry.”
With already low prices, Anderson says the test weight, dockage and foreign material discounts applied at the elevator are an even bigger concern this year.
Test weight discounts have stayed pretty stable over the last few years and he says most producers had relatively strong test weights this year so it shouldn’t be a big issue.
Current dockage discounts, however, can get pretty heavy - starting at $.05 for anything above 1 percent, $.07 for 1.3 percent, $.09 for 1.6 percent, $.12 for 2 percent and it goes up from there.
Anderson says the big discount is foreign material, including rye and other non-wheat material that’s about the same size and weight as wheat. He says over 1 percent is a $.12 discount, 2 percent is $.24 and over 3 percent is a whopping $.50 discount.
Anderson says for producers struggling with discounts this year, now is the time to make changes to avoid issues in the future.
“As you’re planning the ’17 crop, look at which fields had the dockage, look at which fields had that foreign material - that rye - and then find out what you can do to alleviate those problems because these discounts are not going to go away,” he says. “And in my opinion, over time, they’re going to get worse.”
You can hear Anderson’s comments that will be a part of SUNUP this weekend a day early by clicking on the LISTEN BAR below.
In addition to the the weekly Kim Anderson grain market outlook segment - here is the lineup of what will be seen and featured on this weekend's SUNUP program on OETA:
- Watch the story of the Oklahoma wheat harvest from different parts of the state, starting in Texas County.
- Then, Josh Lofton has advice for producers that have yet to double crop their fields.
- Al Suterhland explains the Mesonet's Cattle Comfort Advisor and Gary McManus says the state is drying out again.
- Then we head to Washita County to learn about wheat harvest from the grain elevator operator’s perspective.
- Kim Anderson says dockage is on the mind of producers at harvest.
- In Cow-Calf Corner, Glenn Selk shares the need to follow Beef Quality Assurance guidelines when vaccinating cattle.
- Finally, ride along with fourth generation wheat producers as they harvest their crop in Noble County.
The weekly program can be seen Saturday at 7:30 a.m. & Sunday at 6 a.m. on the statewide OETA network of stations.
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