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Kim Anderson Remains Optimistic About the Price of Wheat, Following Yet Another Dip in the Markets

This week on SUNUP - Oklahoma State University Extension Grain Market Economist Dr. Kim Anderson joins host Dave Deken to review the wheat market over the past month and to offer his advice for producers based on the situation at hand.
According to Anderson, with a dollar now shaved off the KC July, wheat prices in Oklahoma are down roughly $1.80 with an average basis across the state at a -20 cents.
Anderson says many things can be blamed for this continuing downward trend, but in particular identified managed money funds. Speculators of SRW have been short over 72,000 contracts, equal to roughly 362 million bushels. Funds are record short currently in HRW by almost 47,000 contracts or 234 million bushels. Anderson explains as funds ran short in an environment of tight volumes, prices were driven down. In addition, Anderson says the USD climbed over 97 percent on the index, which has since come off that high some - which he believes is behind a brief rally that supported a 23 cent positive price move in just one day in the market.
Given the current environment, though, with an average price in Oklahoma of $4.30 for forward contracted wheat, Anderson says it is not really worth committing to yet - remarking that there is still a lot that can happen between now and harvest. But, with First Hollow Stem arriving, many producers need to make their decision of whether or not to pull cattle off their wheat. Though many are probably still trying to decide what would be more financially beneficial at this point - either grazing it out or harvesting. Anderson’s advice is to do what makes sense for you.
“Think of it like this, are you a cattleman or are you a wheat producer?” he said. “It boils down to what do you like to do and what does your pencil say you can do.”
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