13 December 2018 |

AgriLife economist: 2019 to offer marketing opportunities for wheat producers

Written by melissa.garcia

2018 To Offer Marketing Opportunities For Wheat ProducersSource: AgriLife Today

Texas wheat producers may have an opportunity to see higher prices and higher yields in

2018 To Offer Marketing Opportunities For Wheat ProducersSource: AgriLife Today

Texas wheat producers may have an opportunity to see higher prices and higher yields in 2019, according to a Texas A&M AgriLife Extension Service grain marketing economist.

Dr. Mark Welch, College Station, who spoke at the recent Texas Wheat Producers Symposium, said producers need to be ready to lock in a rate that works for their operation.

Some basic factors emerging from the 2018 crop year are going to set the price trajectory and levels for 2019 to a large degree, Welch said, although there are many macroeconomic conditions, trade policies and issues, that will also influence the final prices.

Welch said U.S. farmers are expected to plant more wheat, particularly in the Southern Plains from Texas to Kansas, where there has been good moisture and much better planting conditions for wheat than in the last several years.

The question becomes: What’s the rest of the world going to do, because the U.S. only grows about 8 percent of the wheat in the world?

The next factor that needs to be looked at is what is going on in other agriculture markets that affects wheat prices, Welch said. There’s a strong correlation between the price of corn and the price of wheat, even though they don’t directly compete in a lot of markets, they tend to move together.

The good news for a Texas wheat producer is the corn price typically has its seasonal high in the months of April, May and into June, and falls off very strongly in July, Welch said. So as harvest approaches, wheat producers have a much better handle on what their production will be and if they see a rally in the corn market, the pricing opportunities may be profitable given what will hopefully be a higher production level.

Welch said a producer may not want to lock the entire crop in at one time, because there is vulnerability and volatility for higher prices, but, “can we do something to take some of the bottom side risk off? We’ve got our crop insurance in place, so you have that safety net, and then if you can raise that with some marketing tools, you have just raised the floor a little bit.” February and March, and then again in May, tend to see some pricing opportunities in the market for wheat, he said.

 

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