AIRWAY HEIGHTS, Wash. — The strong U.S. dollar is keeping wheat prices lower than they should be, a risk management consultant says.
“That’s such a huge hurdle — that means more than the supply chain,” said Kevin Duling of consulting firm KD Investors in Maupin, Ore.
Duling spoke during an Agricultural Marketing and Management Organization (AMMO) workshop, hosted by the Washington Association of Wheat Growers.
Russia is another factor, he said.
Russia’s wheat crop was forecast to be a record 85 million metric tons, but soil moisture currently is 30% of normal, Duling said.
If Russia’s crop is good, it could push prices down $1 a bushel, Duling said. If it’s bad, it could push prices up $3.
Duling also pointed to recent and potential wheat crop problems in Canada, Argentina, Australia, India, China and the European Union that will impact world supplies. That could leave the U.S. as the only nation with any stocks left to export, he said, primarily referring to hard red winter and dark northern spring wheat.
With Australia’s problems, white wheat supplies could be “fairly snug,” Duling said. White wheat is primarily grown in the Pacific Northwest. If China begins purchasing wheat, it’ll likely purchase wheat from the new crop, Duling said.
For farmers looking to sell last year’s crop, Duling said there are two remaining windows: the next two to three weeks, and then possibly in late spring as ships are filled in Portland for final 2019 crop shipments.
For new crop, Duling recommends hedge-to-arrive contracts, particularly if China becomes a major buyer of soft white wheat.
The time to market U.S. wheat has been in the late winter and late spring, he said.
Potential yield losses of 18% to 30%, less acreage and quality problems in the U.S. corn crop could mean more wheat will be used for feed.