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Experts: Wheat Prices
'Fairly Firm,' Could Go Higher

by Matthew Weaver
Capital Press, December 3, 2019

2018 Wheat statistics
State Bushels Yield Est. Acres
Idaho 104 million 91.9 bu/acre 1.1 million acres
Oregon 50 million 67 bu/acre 0.56 million acres
Washington 153 million 71.5 bu/acre 2.1 million acres
Total 307 million 76.4 bu/acre 4 million acres
Wheat prices are trending higher, and market experts say there's room for them to grow.

Prices for soft white wheat, primarily grown in the Pacific Northwest, ranged from $5.90 to $6.10 per bushel on the Portland market.

Prices will remain "fairly firm," said Byron Behne, grain marketer for Northwest Grain Growers in Walla Walla, Wash.

"I don't know that we'll get to $6.50 like we did last year, but I don't really see a lot of downside, either," he said. "I think we're going to be in OK shape."

"It's been so many years since I've been able to say this, but we actually have a bullish fundamental situation going on in wheat right now," said Darin Newsom, a market analyst in Omaha, Neb.

Soft red winter wheat is $5.49 to $5.50 per bushel on the Chicago market, while hard red wheat is $4.70 per bushel on the Kansas City market, he said.

"It's looking a little overbought," Newsom said. "Could it add another 20, 25 cents? Sure. I wouldn't be surprised if we do add that over time."

Newsom said he would be more enthusiastic if Kansas City added 25 to 30 cents, significantly above the $4.70 mark in the next week or so.

Newsom pointed to a weak carryover of stocks for soft red winter wheat on the Chicago market and a lot of new commercial buying. He also sees the potential for the value of the dollar to come down, making U.S. wheat more competitive overseas.

Drought across the Southern Plains -- a major wheat-growing region -- is not critical, but will bear watching if conditions don't improve heading into spring, he said.

As domestic matters gain strength, worldwide issues also affect prices, he said.

"We've got Australia basically on fire -- they're supposed to continue to have hot temperatures," he said. "Their crop could get hurt, which brings more attention back to the United States."

A "groundswell of interest" has been showing up in U.S. winter and spring wheat futures and cash markets, Newsom said.

The Black Sea and Europe had a better wheat crop, which will limit some of the price upside, Behne said.

"I think right now the trend is on the upswing...," he said. "I think it's just general positivity in the ag sector because of the Phase One China deal, although it doesn't really all have that much to do with wheat, or shouldn't, unless the government just makes them buy wheat from us for some reason."

"We have no idea if trade is progressing or not, because we've been told 6,001 times that trade deals are progressing, but nothing has actually been done," Newsom said.

Newsom expects some sort of trade movement before the next elections.

But all the recent price activity may be happening even without trade movement, he said.

"There's just this idea that the wheat complex as a whole is getting more bullish, the U.S. dollar is looking more bearish and all of this could lead to some increased demand for U.S. wheat," he said.

A USDA report Jan. 10 may signal a significant decrease in corn production, Behne said.

If the corn crop is smaller, it lends more support to wheat prices, he said.

"I think they can go up from where we're at currently," he said. "But $6.50, without a weather problem in the spring somewhere to add extra juice, seems like a longer shot now."

Matthew Weaver
Experts: Wheat Prices 'Fairly Firm,' Could Go Higher
Capital Press, December 3, 2019

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