So what can we expect from wheat next season? Well on the whole the layover of a bumper crop will continue to weigh heavy on prices. But that won’t be the end of the story. Producers, hit hard by languishing wheat prices, have decided to opt for other crops this year, and wheat acreage has suffered accordingly. The USDA reports a 7% drop in acreage, and that is going to help buoy up prices when it comes to harvest time simply because there is less wheat to harvest.
And wheat isn’t the only crop to see a drop in acreage planted; corn is also down 7%. Corn has also had a tricky year this year, but despite that the outlook is improving. However, for some producers the price they are getting (around $3.89 per bushel) is still way off the breakeven price that they require.
But it’s not all loss. Brazil is facing the possibility of running out of corn and that will be a blessing for the US corn (and soybean markets) as the Brazilian’s searh for other places to purchase from to feed their population and the animal agriculture business. And this really is great news, because although the US is planting less corn next year, they are still reeling from a bumper crop this year, one that will have a legacy well into the future if they can’t find countries to offload onto.
As for soybean, things are looking up. Continued meat consumption globally means that soybeans are also being driven up in popularity as an animal feed. Despite a bumper crop this year, we’ve seen the USDA publish acreage reports that show the grain is up 1%.
Although that is small, it is significant when compared with the wheat and corn acreage reports.
But in actual real terms, it is hard to predict the prices that we should expect to see next year and beyond with any real accuracy. University of Missouri’s Food and Agricultural Policy Research Institute’s (FAPRI’s) director, economist Pat Westhoff, is one of the only economists calling it this early. His predictions, which take into account market reports, USDA data and historical prices, say good things for corn, with breakeven points met and exceeded as corn finds demand outside the US.
Things aren’t so great for wheat, however, with his predictions putting the grain in the markets with an average price of $3.78 per bushel in the current marketing year and $4.39 per bushel next year,
following two years of sharp reduction in prices.
But arguably these long term trends will mean little if your smaller trades are off. We look ahead, yes, but we also look at historical data finding the past trends and projecting them forward onto future trades. If you are looking for the inside scoop on next year’s prices, then why not consider our fractalerts, delivered to your email and directing your trades through the year ahead.