A recent rally in the wheat marketplace was met with widespread enthusiasm by agricultural producers, and then it evaporated like early morning dew on a hot summer day.
“Lower hard red winter wheat production in the United States triggered the rally, but foreign production seems to have been more than expected, coming in at about the same level as last year’s record harvest,” said Kim Anderson, Oklahoma State University Cooperative Extension grain marketing specialist.
As a result, the market adjusted to reflect the larger crops of countries such as Russia and Ukraine, perhaps – Anderson’s words – “even overcorrecting a bit.” Goodbye rally.
“Prices tend to act like a pendulum,” he said. “When the market gets bad news, it swings back, often too far. Eventually, though, it will swing the other way. The difficult part is when. There was an initial psychological impact caused by the dip in prices. Hopefully, markets will turn more positive in the days and weeks to come.”
As the months of August, September and October progress – when trends of the marketing year are typically set – more information on the status of foreign crops will come in, and this will help analysts understand their nature better and enable markets to gain better footing.
Anderson predicts there will likely be volatility but with the potential to gain back some of the 80 cent losses seen in recent weeks.
“I’m optimistic prices will not go much lower than they are currently,” he said.
Oklahoma is the nation’s fifth-leading producer of winter wheat, according to USDA National Agricultural Statistics Service data.
The Oklahoma Cooperative Extension Service is a state agency administered by OSU’s Division of Agricultural Sciences and Natural Resources, and one of three equal parts comprising the university’s state and federally mandated teaching, research and Extension land-grant mission.