OSU's Kim Anderson Discusses the Spread in Hard and Soft Red Wheats and the Falling Prices of Wheat and CornThu, 22 Aug 2019 18:28:39 CDT
On this week’s episode of SUNUP, host Kurtis Hair and Oklahoma State University Extension Grain Market Economist Dr. Kim Anderson discuss the further drop in corn and wheat prices, and the price spread is so wide from soft red winter wheat to hard red winter wheat.
“You normally have a spread, plus or minus $.20/bu, most of the time hard red winter wheat is a premium to soft wheat,” Anderson said. “Right now, soft red winter wheat is a premium to hard wheat. If you look at the September contracts, you have a $.70/bu spread, that’s well above that normal. And in the December contracts its $.68/bu.”
Anderson says the stocks to use ratio, which is calculated by how much we used divided by the ending stocks, hard red winter wheat is projected to be at 50%. At the end of this marketing year, we will have 50% of the wheat we need for next year, while soft red winter wheat is only 39%. So, the supply and demand of soft wheat is in a much better position than hard wheat, he added.
“If you look at production, over the last 10 years, hard red winter wheat production has averaged 850 million bushels,” Anderson said. “We are producing 840 this year. Soft red winter wheat, 340 million bushels average, but 257 this year.”
Planted acres in hard red winter wheat over the last 5 years, has averaged 25% below where it was 5 years ago, while soft wheat is 34% below where it was in the same time, he said. The protein content in the two kinds of wheat are also vastly different this year. The average protein of hard red winter wheat is below average, at around 11.3%. While soft wheat is well above average, Anderson added.
The prices continue to fall in the wheat and corn markets. Anderson says the reasoning for some of it, is the debate of whether the USDA projections are correct or are the market projections correct. He thinks the markets are close to bottoming out. And the September World Agriculture Supply and Demand Estimates (WASDE) report will determine where the prices go in the coming month.
This week on SUNUP, we get an update on summer crops from Josh Lofton.
- Then Seth Byrd says cotton needs heat units, but not hundred-degree temperatures. Overall, cotton is progressing nicely across the state, especially irrigated cotton.
- In the Mesonet weather report, Wes Lee shows us how the state has been compared to average. Gary McManus says drought is strengthening across southwestern Oklahoma.
- Bob Hunger explains why controlling volunteer wheat and grassy weeds now, can limit mite-transmitted diseases in the 2020 wheat crop.
- In Cow-Calf Corner, Glenn Selk says the length of stage two can impact the success of calving.
- Kim Anderson answers a question about pricing differences between hard and soft red wheat. Kim also says the wheat market may have found the floor, but don't expect it to bounce back soon.
- Finally, we learn about the important role wetlands play in Oklahoma and how they help ecosystems heal following flooding events.
Join us for SUNUP:
Saturday at 7:30 a.m.
Sunday at 6 a.m. on OETA-TV
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