Agricultural News
Wheat Growers Face Grim Economic Picture, Important They Know How Much Risk They Can Afford
Mon, 15 May 2017 15:33:06 CDT
Radio Oklahoma Ag Network Farm Director Ron Hays spoke with Oklahoma State University Extension Grain Market Economist Dr. Kim Anderson, who presented at the OSU Wheat Field Day in Lahoma last week. According to Dr. Anderson, the overall economic outlook for the wheat industry here in Oklahoma and around the country is rather grim, given the ongoing struggle to work through the sheer massive amounts of grain stocks leftover from the record harvest of 2016, that continue to weigh on markets. However, he says if producers can manage their crops in such a way to maximize test weight and protein, the chances of being profitable will be more obtainable, in a market that today is starved of that kind of quality product. You can listen to Hays' complete interview with Anderson, by clicking or tapping the LISTEN BAR below, at the bottom of this story.
Right now, market prices are below the cost of production. But Anderson says for producers who have kept their fields clean, sprayed fertilizer and used fungicides, could potentially stand to break even, if they are able to harvest 60 or more bushels per acre.
"For those producers, we're probably near breakeven or maybe slightly above. But, they're not going to make much," Anderson said. "The majority of farmers though, will be below breakeven price."
Anderson says he sees the industry evolving into two segments: feedgrain and milling grain. The graze and grain method has become a popular production practice in the state, but it has its drawbacks, which can harm the overall quality of a wheat crop. These days, farmers must grow competitively to secure the top premiums for their crop.
"Wheat farming anymore is not just planting it in the ground and harvesting it," he said. "It's managing these fields, throughout the entire year. It's scouting those fields, looking for insects, looking for disease. It's becoming intimate with those fields and knowing how those fields react to different stimulates, different fertilizers."
Regardless a producer's preference, Anderson offers his risk-averse strategy, selling a third of your crop at a time, once a harvest, again between September and October and finally between November and December. He also advises, that if you can afford to, consider merchandizing your grain. But he warns that you first be aware of the risks associated with storing grain and understand the difficulty involved.
"It's a very grim picture," Anderson concluded. "But the producers have to know how much risk they can take."
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