Here at the start of 2019, just over a month in, little movement has been seen in the market relative to the price of wheat. This week on SUNUP - Oklahoma State University Extension Grain Market Economist Dr. Kim Anderson joins host Dave Deken again to compare the current market situation to that of this time last year.
In 2018, wheat prices peaked at $5.75 during early June. From there, they steadily declined. In February of 2018, though, cash wheat prices were near $4.00 at 64 cents under basis. To forward contract at that time, a producer could expect $4.25 at 70 cents under basis. Right now, Anderson reports the price of wheat at $4.80 - $4.85. Forward contracting today would earn a producer 35 cents under basis at $4.80 a bushel. That’s a positive difference of about 70 cents today, compared to the price of wheat last year at this time.
“Look at what went on in the market this time last year,” Anderson explained. “We had an excess of wheat. We do right now, too, but last year’s wheat was very poor. The market needed that ’18 crop when it was harvested. It was good quality and it drove prices up for a few days and then back down to that $5.00 range.”
Whether or not a price spike like that is repeated this year remains a mystery - but Anderson says the potential could be there if 1.) this crop is of high quality; and 2.) there is strong export demand this spring. If not, Anderson says prices may still see a bit of a bump, predicting the market will be in need of grain - regardless of quality - but nowhere near the 70-cent gain seen last year.
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