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Wheat Prices May Increase
But Not Much, Economist Says

by Matthew Weaver
Capital Press, April 2, 2018

Wheat prices will stay in a relatively low range despite lower grain stocks, says Randy Fortenbery,
small grains economist at Washington State University.

(Don Jenkins photo) A ship takes on grain at the Port of Kalama on the Columbia River in Washington state. A large worldwide supply of wheat and the strong dollar are impacting wheat exports, but low-protein wheat grown in the Northwest is still sought after in Asian markets. Rebounding wheat prices aren't likely to go much higher despite USDA reports of smaller stocks, a small grains economist says.

Nationally, wheat stored in all positions dropped 10 percent, from 1.66 billion bushels to 1.49 billion bushels. The amount of wheat stored in all positions in Idaho dropped from 55.4 million bushels a year ago to 39 million bushels, a nearly 30 percent decline. Oregon wheat stored in all positions dropped from 27.7 million bushels in 2017 to 22.6 million bushels, a 18 percent decline. Washington wheat stored in all positions dropped 20 percent from 104 million bushels to 82.9 million bushels.

It's not surprising that stocks are down, given that overall supplies are also down relative to a year ago, said Randy Fortenbery, small grains economist at Washington State University.

Reduced stocks puts less downward pressure on prices, Fortenbery said.

Wheat prices have increased by about 5 to 6 cents per bushel, he said, but soybeans and corn have had bigger rallies, which is hard to explain given the stocks report.

"It's really hard to take the information we got and translate that into the price rallies we saw," Fortenbery said.

Soft white wheat is roughly $5.40 to $5.66 per bushel on the Portland market.

Crop prices are still in roughly the same range they've been for the last month or two, and are still well below prices from three to four years ago, Fortenbery said.

Exports for all three crops are behind where they need to be for the time of year to hit USDA's forecast for the marketing year, which ends May 31, he said.

"We've got a lot of export competition internationally, so everyone has a lot of wheat to export," he said.

The value of the American dollar is also a factor. Recently, the dollar has been down compared to major foreign currencies.

Concerns about the Trump administration's trade policies could also play a part, Fortenbery said,

If exports continue to lag, Fortenbery said, "it's going to be hard to argue that prices should be much higher than they are now."

USDA also called for slightly more wheat acres nationally and in the Northwest in its prospective plantings report.

Idaho is expected to plant a total of 1.24 million acres of wheat, up 6 percent from 1.17 million acres in 2017. Oregon is expected to plant 790,000 acres, up 2 percent from 775,000 acres. Washington is expected to plant 2.23 million acres, up 1.6 percent from 2.2 million acres in 2017.

Nationally, wheat acres are expected to increase nearly 2.9 percent, from 46 million to 47.3 million acres.

Spring wheat and corn planting conditions will be important in the coming weeks, Fortenbery said. Wheat prices are affected by corn prices.

"If we end up having any disruptions, not able to plant the number of acres that they're now projecting we will plant, that could be a little bit positive for the market," Fortenbery said. "But if we have great planting conditions, that means we will lose a weather scare. It will be hard for the market to rally much."

Matthew Weaver
Wheat Prices May Increase But Not Much, Economist Says
Capital Press, April 2, 2018

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