Wheat Futures Encouraging For Producers
The May wheat futures prices were the highest they have been since 2014
Photo by Steve Patton, UK agricultural communications
PRINCETON, KY.
The wheat market is showing signs of price improvement, and that is good news for Kentucky farmers who want to market existing stocks, sell a portion of this year’s crop at harvest or get a start on marketing the 2019 wheat crop.
“The current market is a result of a drought in the Southern Plains and the Dakotas last year that reduced their winter and spring wheat crops. The Southern Plains states were hit again this winter with drought, which has aggravated the situation,” said Todd Davis, agricultural economist in the University of Kentucky College of Agriculture, Food and Environment. “The reduced production has helped lower wheat stocks and support higher prices.”
Kansas, Oklahoma and Texas are three of the top winter wheat producing states. These states had a considerable portion of their crop rated very poor to poor in the U.S. Department of Agriculture’s crop progress report released June 4, and 35 percent of the entire U.S. wheat crop was rated as being in very poor or poor condition. Drought was a contributing factor.
While the report is not a good forecast of yields, the anticipated lower production has increased futures prices. During May, the July futures contract had an average price of $5.17 a bushel. A March 2019 futures contract averaged $5.71 a bushel in May. These are the highest May prices for both of these contracts since 2014.
At the end of May, the July 2019 futures contract was $5.90 per bushel.
“Producers who are going to seed wheat this fall should consider using the July 2019 contract to help them protect their price risk,” Davis said. “That is a very good pricing point to start risk management for the 2019 crop.” ∆