Slow wheat demand depresses prices
Market analysts predict wheat prices will remain stagnant or drift lower following the USDA World Agricultural Supply and Demand Estimates report that projected more production and larger ending stocks.
“It was sort of a bummer of a report as far as wheat was concerned,” said Byron Behne, marketing manager for Northwest Grain Growers in Walla Walla, Wash.
The USDA didn’t increase projected export demand, which had been expected and reduced estimates of domestic use of hard red winter wheat.
Ending stock numbers were higher that USDA’s September report, increasing to 178.48 million metric tons from 176.28 million metric tons globally and to 15.37 million metric tons from 15.28 million metric tons in the United States. That’s despite hard red winter wheat production cuts and exports to Brazil, Behne said.
The USDA report projects a range of $6.70 to $7.30 per bushel for the season-average wheat farm price.
Since harvest, soft white wheat prices in the Portland market have ranged from $7 per bushel to $7.40 per bushel.
“When prices dip down toward $7 (per bushel) in Portland on white wheat, basically grower selling shuts off completely and picks back up again when we get back up to $7.25, $7.30,” Behne said.
Soft white wheat will likely trade at a narrow range, over the $7 per bushel range, said Dan Steiner, grain merchant for Pendleton Grain Growers in Pendleton, Ore.
“Getting over $7.50, $7.60 is going to be a lot of work,” Steiner said.
Darin Newsom, senior analyst for DTN in Omaha, Neb., said the wheat market hasn’t gone as high as it needed to and also pulled back quickly.
“It’s testing its recent lows, and it could start to move lower,” he said.
The wheat cash market could continue to support the market as a whole, including futures market. Support could come in from corn and soybeans, Newsom said, but if they also see price declines, it could push wheat to new lows.
“We’re going to have to be really careful with the wheat marketing here and be willing to make sales when we may not want to,” he said.
Behne recommended farmers start making sales on new crop wheat, especially whatever is not insured.
“Getting to that 15 to 20 percent sold mark at this time would probably be a good idea,” he said.
Behne recommends selling during price rallies.
He doesn’t expect any significant rallies unless supplies are tighter than anticipated in the January quarterly stocks report.
For new crop wheat, expected to be grown this next year, the cash price isn’t bad, Steiner said.
Steiner said wheat futures at $7.20 per bushel is a good place to start selling on the futures market.
He advises patience with old crop wheat, already grown and harvested.
“You’re going to get another opportunity to sell some $7.50, $7.60 soft white wheat,” he said.