PULLMAN, Wash. — A Washington State University professor will provide an economic forecast for the coming year during his presentation at the Spokane Ag Expo and Pacific Northwest Farm Forum.
Randy Fortenbery, WSU small grains endowed chair, plans to provide a general outlook for the grain markets, with specific information tailored for the region.
“Forecasts are always — you look forward to giving it, then you might regret giving it a month later,” Fortenbery said. “None of us has a crystal ball, so things can change in a hurry with unforeseen events.”
Fortenbery said he considers national prices and looks for the meaning locally.
“I talk a lot about events that would make expectations wrong,” he said. “I’ll say, given what we know today, here’s what I think, but here are the things that could happen that could dramatically change this outlook or this picture.”
Grain prices were lower in 2015 than previous years. Fortenbery doesn’t expect significantly higher prices, but in October said he believed they would slowly drift upward in the new year.
“Not by enough to cover storage costs unless we have some sort of unexpected event — a weather event or some sort of political upheaval somewhere,” he said.
Grain cash prices will improve compared to futures prices, he said. Later futures prices were a little higher than nearby prices, indicating cash prices could increase.
Much depends on the weather in the spring and how much moisture accumulates during the winter.
“Right now, it’s really a demand-driven market,” Fortenbery said.
Volatile corn and soybean prices are also impacting the market, and the economic outlook for some international customers remains uncertain, he said.
“We seem to have abundant stocks to satisfy the demand we have now,” Fortenbery said. “Especially in the case of wheat, exports have not performed at the level USDA thought they would earlier in the marketing year.”
Corn and wheat exports tend to be connected, and neither were performing particularly well in the fall.
Fortenbery said the U.S. dollar needs to weaken to improve exports. But when the Federal Reserve raised interest rates in December, the dollar further strengthened as more capital entered U.S. financial markets.
“If there’s going to be any significant movement, it’s probably toward a stronger dollar than a weaker dollar in the short-term,” Fortenbery said.
Fortenbery also advises farmers keep an eye on economic conditions in China. In the fall, China’s gross domestic product grew, but less than expected.
“They’re an important market for some of our ag commodities,” he said. “Less so for wheat, but all of these commodities are tied together in terms of price. China not being an aggressive corn buyer would not be good for our wheat markets.”