Expert: Wheat Prices
by Matthew Weaver
Wheat prices are likely to remain relatively flat for the next six to seven weeks as harvest continues, but a falling dollar could boost demand, an agricultural economist says.
Soft white wheat, the main type grown in the Pacific Northwest, sells for about $5.50 to $5.59 per bushel at Portland.
The U.S. dollar is down 10% since March, and is at one of the lowest levels it's been in the last five to six years, said Randy Fortenbery, small grains economist at Washington State University.
The only time it was lower was in 2018 and 2014 before that, Fortenbery said.
Wheat prices are tied to the value of the dollar, because nearly 90% of the Pacific Northwest wheat crop is exported. Overall, 45% of the U.S. wheat crop is exported.
"The more attractive the dollar is to international buyers, the more attractive U.S. wheat is," Fortenbery said. "Prices do respond to exchange rates, but they respond to a lot of other things as well."
As of Tuesday, $1 was equal to 48.94 Philippine pesos, down from a high of 52.50 on March 19.
One dollar was equal to 106.50 Japanese yen, down from 111.12 on March 24, and equal to 1,186.14 South Korean won, down from 1,264.40 on March 23.
A weak dollar is typically good for agricultural exports, Fortenbery said. Wheat export levels are ahead of their pace at the same time a year ago, and on track to reach USDA's forecast of total exports for the marketing year, he said.
But a weaker U.S. dollar isn't good for importers, because if the dollar has less value, it increases the price of foreign-made items such as steel or automobiles coming into the country.
Fortenbery cited trade uncertainty, with renewed "heightened frictions" between the U.S. and China, as the reason for the weaker dollar.
Wheat prices are still well below the cost of production, Fortenbery said. Prices have rallied about 80 cents per bushel higher in recent months, but have fallen in the last few days.
China faces flooding and the potential breaching of dams on the Yangtze River. That could affect many agricultural regions downstream, and have a positive effect on U.S. commodity prices, including corn, soybeans and wheat.
Harvest season isn't typically a rally season, unless something "extraordinary" happens, like flooding on the Yangtze, Fortenbery said.
"We'll have to see how this plays out," Fortenbery said.
Above-average Yields Seen for NW Wheat by Matthew Weaver, Capital Press, 8/7/20
Experts: Wheat Prices 'Fairly Firm,' Could Go Higher by Matthew Weaver, Capital Press, 12/3/19
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