Many agricultural producers can be excused for feeling a bit nauseous given the tumbling price of wheat, down approximately 40 cents over the past several weeks in October as of this writing.
“The Dollar Index increase of about 3 percent, from around 93.4 to 96.4, essentially raised the export price about 20 cents per bushel,” said Kim Anderson, Oklahoma State University Cooperative Extension grain marketing specialist. “Compounding that issue is U.S. export sales of wheat continue to be in the tank.”
Total sales of U.S. hard red winter wheat since June 1 are 36 percent lower than last year. Furthermore, analysts with the U.S. Department of Agriculture expect prices to drop another 10 percent for the year.
“No recovery has been made so far as countries around the world have been opting to purchase wheat from nations besides the United States,” Anderson said.
To make matters more worrisome, reports have brought conflicting information as to the size of the Russian wheat crop. As long as Russia has wheat to sell in the global marketplace, it will take a bite out of U.S. price margins.
Overall, Anderson said America’s domestic wheat market seems to be set up for a “downtrend,” citing the break in the $5 support level in the Kansas City December contract falling to the July low recently of $4.93.
“If it continues to fall below that, prices could go as low as another 20 cents or so,” he said. “Prices will improve, eventually, but not until export sales do, and that is dependent on when Russia runs out of wheat to sell, which probably will not occur until sometime around the first of the new year.”
Anderson advises grain producers who can afford the 50-cent price risk to store their wheat until sometime in December or January, when he believes prices are set to improve.
“Otherwise, take the emotion out of the equation and sell your wheat in lots between now and then,” he said.
The news is not all bad relative to Oklahoma’s wheat crop, though. Producers who run a dual-purpose graze-and-grain system generally are looking forward to having good forage on hand, at least once it dries up enough to turn out cattle on available pasture.
"Those who got their wheat in on time are in a favorable position relative to running cattle,” said Trent Milacek, OSU Cooperative Extension area agricultural economist. “While the grain side has been taking a bit of a hit, the opportunities for grazing livestock may help to offset that over time for some producers. Just remember to take the cattle off the wheat at first hollow stem stage to allow for grain production later on in 2019.”
Although overall harvested crop numbers vary slightly year to year, Oklahoma typically ranks as the nation’s fourth-leading wheat-producing state, according to USDA National Agricultural Statistics Service data.
The Oklahoma Cooperative Extension Service is one of two state agencies administered by OSU’s Division of Agricultural Sciences and Natural Resources, and is a key part of the university’s state and federally mandated teaching, research and Extension land-grant mission.