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Outside Factors Keep Wheat
Prices Low Despite Lower Supply

by Matthew Weaver
Capital Press, April 1, 2015

USDA's prospective plantings report puts wheat numbers lower than
industry expectations, but prices will continue to struggle, market analysts say.

Chart: US Wheat prices from 2005 to 2015. The USDA's forecast for wheat acreage and supplies is smaller than the industry expected, but it will take a major issue with this year's crop to push prices higher, analysts say.

The USDA prospective plantings report calls for less wheat than the industry expected, said Henry Kornegay, president of Jackson Commodities in Coeur d'Alene, Idaho.

The average trade guess for all wheat was roughly 55.612 million acres, and USDA reported 55.367 million acres, Kornegay said, with 12.97 million spring wheat acres instead of the 13.24 million acres anticipated.

The U.S. estimate is down roughly 3 percent from 56.822 million in 2014.

According to the USDA National Agricultural Statistics Service Northwest regional field office in Olympia, Northwest wheat acres are up 3 percent from the previous year.

Idaho wheat producers expect to plant 1.33 million acres of wheat, up 4.4 percent from 1.27 million acres in 2014. Oregon wheat producers anticipate planting 850,000 acres, up 2.4 percent from 830,000 acres in 2014. Washington wheat acres are expected to plant 2.38 million acres, up 2.6 percent from 2.32 million acres in 2014.

Even though a report of fewer wheat acres than expected usually means prices go up, Kornegay believes short-term speculators and larger than expected corn stocks and acreage kept prices down. Wheat prices ranged from $6 per bushel to $6.51 per bushel on the Portland market, according to the USDA Agricultural Marketing Service, down 18.5 cents from the day before.

"Wheat's getting hammered right now," agreed Dan Steiner, grain merchandiser for Pendleton Grain Growers and Morrow County Grain Growers in Oregon. Wheat stocks were also lower than the market anticipated, he said.

Steiner said a strong U.S. dollar and a struggling world economy, including metals and energy prices, are factors in the lower wheat prices. He believes soft wheat prices will range $6.40 to $6.50 per bushel through early harvest.

"There's a lot of things to actually like about the wheat market, but we're going to need some good things to happen for any of that to translate into higher prices," he said.

There's very little 2014 wheat left, particularly in the PNW, Steiner said. The 2015 wheat crop has pockets of good-looking wheat, he said, but the vast majority is "totally underwhelming."

"We're going to have to work hard to get an average crop," he said. "It's certainly doable, but we're not going to have a bumper crop. Not in the PNW, anyhow.

Dry conditions in the southern Plains will keep the market supported against any further downward movement until further into the growing season, Kornegay said.

"Either we end up with an issue as far as the dryness of the crop condition goes, or we get timely rains, in which case we'll break and probably go to new lows," he said.

Related Pages:
Wheat Planting Level Lowest in 30 Years by Scott A. Yates, Capital Press, 4/5/2002
Pendleton Attorney and Farmer Reappointed to NW Power Council by Eric Mortenson, Capital Press, 4/14/15
Washington Wheat Industry Asks Decision Makers to Consider Billion-dollar Impact by Matthew Weaver, Capital Press, 4/13/15

Matthew Weaver
Outside Factors Keep Wheat Prices Low Despite Lower Supply
Capital Press, April 1, 2015

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