High Global Stocks Weaken Wheat Prices

Northwest FCS Vice President of Market Research and Development Michael Stolp shares details from the fourth quarter results of the Small Grains Market Snapshot.

Stolp: "Northwest wheat producers face a changing marketplace entering 2014. Wheat market fundamentals are bearish, pressured by rising global stocks and weak cross market support from corn. Although U.S. wheat production was down in 2013/2014, worldwide wheat stocks rose. Stronger near-term prices are unlikely without a supply disruption. Lower corn prices are generally pressuring grain prices, and ample corn supplies are reducing the amount of wheat used as feed. Profitability for wheat producers will be challenged in 2014 given falling prices. However, strong profits in recent years bolster wheat producers' ability to bear downside risk."

 

The Market Snapshot shares that extreme cold in early December permeated the Northwest. Expectations of winter kill are low in most areas. In Northern Idaho, snow cover mitigated the effects of brutal cold in most areas. Although Washington was absent snow cover, adequate soil moisture should limit losses. However, losses are expected in isolated areas of Northeastern and North Central Oregon, where frigid temperatures and wind met bare winter wheat fields.

Wheat producers are expected to end 2013 profitably. Exceptions include select producers in northeastern Oregon where late growing season drought and extreme heat depressed wheat and other crop yields.