OSU's Kim Anderson Talks About How the WASDE Report May be to Blame for the Fall in Wheat PricesThu, 15 Aug 2019 17:58:40 CDT
On this week’s episode of SUNUP, host Kurtis Hair and Oklahoma State University Extension Grain Market Economist Dr. Kim Anderson discuss the $.35/bu price decrease this week. Anderson says the USDA World Agricultural Supply and Demand Estimates may to be blame for the fall in the market.
“The WASDE report was released last Monday, and it did not meet expectations, especially with corn,” he said. “The pre release estimates had corn at 13.2-billion-bushel production, it can in at 13.9.”
Anderson says wheat has been priced with corn, when corn prices drop, wheat prices drop with them. In the WASDE, they raised the U.S. wheat production 60 million bushels, with the majority of that being hard red winter wheat and the rest being hard red spring wheat. Anderson said the increase in production caused some weakness in the wheat market. The hard red winter wheat protein overall for the U.S. is coming in around 11.2 to 11.3%, while Oklahoma averaged 11.4%. Anderson said the market needs 12 to 12.5%, so our wheat is being priced in the feed market.
“You go back a couple months, we were expecting Russian production to be 2.85 billion bushels, right now it is at 2.68 billion bushels,” he added. “Last year it was 2.64 billion bushels, so it is just slightly higher this year than it was last year. Below expectation, but Ukraine increased production and offset that decline in Russia’s production.”
Anderson says in the Black Sea Region; production right now is at 4.23 billion bushels compared to 4.07 billion bushels last year. So, there is a significant increase in production in the BSR, even with Russian expected production lower. Their exports are looking like they will stay about the same as last year, Anderson added.
With the recent drop in the wheat prices, Anderson is skeptical they will recover much. He says there is always a chance prices will recover, but with no bounce back after the $.35/bu drop, he doesn’t see them going back up where they were. Anderson is also worried about the fact the futures are bottomed out, but the basis is still strong. He says he is afraid of what could happen to the market if the basis falls out too.
This week on SUNUP, Dave Lalman has advice for producers who choose to feed wheat grain to cattle.
- In Cow-Calf Corner, Glenn Selk explains what should go into a calving kit.
- Then, Justin Talley talks about the importance of managing horn flies.
- Derrell Peel says the recent fire at the Tyson plant in Holcomb, Kansas could have a temporary impact on beef markets.
- In Food Whys, Darren Scott explains the history of ketchup.
- In the Mesonet weather report, Wes Lee shows us what parts of Oklahoma have yet to see more than .25” of rain. Gary McManus says drought will continue to grow, despite the recent rain.
- Kim Anderson says that if producers still have wheat in the bins, they should look at December and March call options.
- Finally, we see how OSU Extension Fire Ecologists are teaching NRCS specialists from all over the country how to conduct prescribed burns.
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Saturday at 7:30 a.m.
Sunday at 6 a.m. on OETA-TV
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