Wheat Quarterly Market Snapshot

With the fourth quarter's Market Snapshot for wheat — here is Northwest Farm Credit Services Michael Stolp.

Stolp: "Wheat producers' margins are tight, squeezed by surging U.S. and global supplies. U.S. 2016-17 wheat production increased 12 percent despite fewer harvested acres. Globally, 2016-17 wheat production is forecast at the fourth-consecutive record high. Facing overproduction, wheat producers' returns vary. Low-cost, efficient operators' returns are generally at or above breakeven, while losses are more common among higher-cost operations."

 

The wheat snapshot provides an outlook of low wheat prices to likely be persist in 2017, with higher prices constrained by record world production and ending stocks. The USDA's 2016-17 season-average farm price for all-wheat is projected at $3.60 to $3.80 per bushel.

Wheat prices at 15-year lows continue to pressure producers' margins. Although markets provide little relief, losses from falling numbers in the Pacific Northwest were less significant than originally thought and expected to be reimbursed in some areas.

Wheat growers' profitability varied significantly with buffers to low prices including strong 2016 wheat yields, ARC and PLC. Low-cost efficient operators' returns are generally at or above breakeven, while losses are more common among higher-cost operations.