Things can change in a hurry after Randy Fortenbery makes a prediction about wheat prices.
“By the time I get in my car and drive off, I could be wrong,” he said with a laugh.
Wheat prices are influenced by many factors, any of which can change suddenly.
Crop progress through the winter matters, said Fortenbery, the small grains economist at Washington State University in Pullman, Wash.
For example, growers in Kansas might have concerns about a winter freeze, or their counterparts in the Pacific Northwest might worry if they have enough snowfall to protect the winter wheat crop.
“There’s always some uncertainty,” Fortenbery said. “Between now and March, the market is focused on demand, because supply is kind of set.”
Come spring, the focus will be on spring wheat acreage and its potential effect on prices.
When he spoke with the Capital Press in November, Fortenbery said prices were dynamic because of two factors: the fluid trade situation and a late corn crop.
In the months leading up to February in the past, the biggest issue was whether enough grain was being exported to match USDA projections, Fortenbery said.
Resolution of trade friction will also be a “huge thing” in the rest of 2020, Fortenbery said.
He wondered how quickly the export pace would pick up after trade deals with Japan, Canada, Mexico and China were solidified.
Fortenbery said his interest in agricultural economics happened “by accident.”
He originally intended to study zoology and wildlife management, but he was taking “quite a few” economics classes.
“I got interested in how science information was used to impact policy, or maybe more accurately, how often it wasn’t really used to impact policy,” he said.
Fortenbery saw an opportunity to study a discipline impacted by policy, which meant agriculture.
His plan was to go to law school, but his wife was a year behind him. He waited for her to finish, and got offered a chance to get a master’s degree in economics. That completely flipped his interest, he said.
Fortenbery originally worked with corn and soybean prices at the University of Wisconsin, then worked at a trading company in Chicago in cattle and hogs. He was the director of a Wisconsin agribusiness institute, working with dairy, packers, exporters, processors and food companies.
When he arrived at WSU, his focus shifted to small grains.
“Wheat is grown everywhere in the world — that’s not true of any other real staple commodity,” he said. “It’s also consumed everywhere in the world. So the dynamics of how it gets delivered where it’s going to be consumed is very intricate.”
Trade deals and relative value of currencies matter, Fortenbery said. The incentives for individual countries to produce certain crops for food security or export matters “a lot,” he added.
For most crops, one or two major producers or consumers can be identified.
With wheat, “it’s a much more dynamic environment because it’s not like any one country dominates production, or represents the primary consumption center,” he said.
Corn is essentially corn, Fortenbery said. But wheat has different classes and uses. They’re all related when it comes to price, even though they go to different customers.
When he talks to farmers, Fortenbery said he also tries to convey the conditions that would make him change his his forecast.
“A large part of it is understanding these really are international markets, and what happens to us locally won’t necessarily have a positive or a negative impact on our price or income,” he said. “It’s a much bigger, more complicated picture than just what’s happening in our field, county or state.”