OSU's Kim Anderson Offers Market Outlook on Grain PricesTue, 24 Mar 2020 12:20:43 CDT
Crop Marketing Specialist, Dr. Kim Anderson at Oklahoma State University offers this market analysis on grain prices the past few weeks:
During the last seven trading days, wheat prices have increased between 62 and 67 cents. Wheat may be forward contracted for harvest delivery in Snyder, Oklahoma for $4.47, in Dacoma for $4.65, and in Medford for $4.79. These higher prices may be the result of China buying 12.5 million bushels of U.S. hard red winter (HRW) wheat and an increased demand by bakers to meet the increased demand for bread, pasta, and flour. Will these demands continue?
In the February Agricultural Outlook Forum, the USDA projected U.S. 2020 wheat production to be 1.84 billion bushels (bb) compared to 1.92 bb last year. The IGC (International Grains Council) projects 2020/21 world wheat production to be a record 28.3 billion bushels (bb) compared to 28.1 bb in 2019/20. Analysts have projected that 2020 Russian wheat production will be 150 million bushels (mb) higher than last year. Kazakhstan’s production is projected to be 100 mb higher, and Ukraine’s wheat production is projected to be100 mb lower than in 2019. A net 150 mb wheat production increase is projected for the Black Sea exporters.
Analyst have projected a 120 mb decline in 2020 EU wheat production. Australia’s wheat production is projected to increase 150 mb. IGC’s 2020/21 wheat production estimate of a record 28.3 billion bushels is probably a pretty good estimate. Irrespective of the numbers, more than adequate wheat supplies are and will be available, so wheat prices are expected to remain relatively low.
The increased miller and baker demand may not last long, and who knows what China will do. If China buys more U.S. wheat, the odds are that prices will increase. If China does not buy more U.S. wheat, the result is uncertain.
At this writing, wheat may be forward contracted for harvested deliver for $4.67 (KC July -23?) in Northern Oklahoma, $4.50 (-40?) in Southern Oklahoma and $4.50 (-40?) in the Panhandle. Historically, the best time to sell Oklahoma wheat is during the June through August time period, however, producers may want to forward contract a small amount now.
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