11/07/07 Ag economist says wheat market losing steam

Farm and Ranch November 7, 2007 University of Illinois Extension Ag Economist Darrel Good says the bullish attitude toward wheat is beginning to settle out. Good points to the wild swings from one end of the trading range to the other in the futures markets at Chicago and Kansas City. Good: "I think the volatility is associated with a couple of things. One is what I call non-traditional money in the wheat market. A lot of speculative money there pushing prices around. And then the continuation of the very tight world wheat situation that keeps the fundamentals off balance as well. So we will see a big export sales week and the market will respond up sharply. Then we will see a smaller sales week and prices drop. So I think to some extent that is characteristic of a market that is kind of running out of steam. That you see this kind of volatility at the top of the market and we have dropped off well over a dollar now on old crop wheat prices." Good says that's because it appears the 2008 wheat crop will more than replenish supplies worldwide, but he says Chicago new crop prices are still strong enough that it's worthwhile for a farmer to price out some of the 08 crop. Good: "You know I think $6 harvest delivery you have got to be pretty aggressive. I know there is substantial yield and production risks on wheat. So, how many bushels is aggressive, but certainly I think if you have increased acres, getting those acres priced is a pretty good rule of thumb." I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.