Tight supply to bolster soft white wheat prices
A tight supply will lift soft white wheat prices in the coming months, Northwest wheat marketing experts say.
According to USDA Agricultural Marketing Services, soft white wheat prices were mostly $7.19 per bushel, ranging from $6.96 per bushel to $7.36 per bushel.
Ty Jessup, merchandiser for Central Washington Grain Growers in Waterville, Wash., and industry representative for the Washington Grain Commission, expects soft white wheat prices to remain at the same level.
Moving into the winter, the market will turn its attention to next year’s crop, Jessup said. Prices will adjust according to the outlook.
“The challenge for next year’s crop is not knowing what next year’s crop is going to be,” Jessup said, pointing to possible impacts of a recent cold snap. “The hard part about winter weather conditions is we can kill a crop several times, but you don’t ever know the answer until next spring.” Soft white wheat is a little high in protein, but good quality, said Dan Steiner, grain merchandiser for Pendleton Grain Growers and Morrow County Grain Growers. The 2015 crop does not appear to be off to a good start, with dry conditions and late planting affecting development of the root system, he said.
He expects prices will remain steady through the holiday season. But he’s encouraged by USDA reports calling for the second-tightest carryout — the amount of wheat left over from 2014 — since 1988.
“The only year it was tighter than that was the year it went to $16 per bushel,” he said. “No, we’re not going to $16, I don’t think, but we’re going to have really tight carryouts.”
If production problems occur in a major wheat-producing corner of the world, Steiner said, prices could easily reach $8 per bushel.
“This market’s not going to stay down long - it may dip, we may have adjustments of the futures, but right now there’s not any serious downside for any extended period of time,” he said.
Byron Behne, marketing manager for Northwest Grain Growers in Walla Walla, Wash., agrees that a tight supply will likely raise prices in February or March.
“That might be the time period where we start to see some big gains,” Behne said. “With white wheat being the only variety of wheat that’s super tight this year, prices should stay firm and move higher, maybe towards $8 per bushel.”
The world wheat supply is strong enough that Behen also doesn’t foresee $16 wheat.
“Prices are at the highest levels we’ve been since prior to harvest, so if a guy needs money it’s not a bad time to sell some wheat,” Behne said. “But if you don’t have to, I don’t mind sitting on wheat just to see what happens.”