Wheat prices and plans

[malleefarmer]

So weve got a mountain of wheat in the world and is kinda hard to find a reason for a price increase in short term.

The aussie dollar currently at $1.06 against us dollar is helping our cause.
Canadian dollar similar problems.

A shift to more corn acres at the expense of wheat?
In Australia maybe a shift to more canola acres and barley at the expense of wheat.

A drought in northern hemisphere, winter kill.

seems like something from left field is needed to spike prices and if prices do spike is there enough credit in the world to pay for it?

was thinking we may see a inflationary effect but seems opposite is occuring.

best price going going foward for our standard apw wheat here in aust is $230 port basis which equates to about $200 on farm. Thats 9 to 11.5% protien sort of general pupose wheat which is our benchmark 2 higher protien grades aboves and 3 grades below. premiums and discounts apply for both at time of contracting.

Same time in 2011 were looking at $305 on farm.

Many marketing gurus suggest here could be a year to do nothing as they seem to think further downside is minimal but upside the same unless the odd weather spike occurs as mentioned above.

[Integrity_Farmer]

$5.44 A BUSHEL GOD HELP US! I thought with all that competition and freedom you were given you would have higher prices.
Why aren't they competing to buy your wheat?

[malleefarmer]

i reckon they are IF we have around 25 buyers at our local elevator most days with a spread of about $18 bucks from top to bottom per tonne.

that price is lower or higher or on a par with prarie prices?

[charliep]

On par with western Canadian prices. Comparable would be our prairie spring wheat. Lots of wheat in the world at the moment as indicated by the last USDA report. Winter kill US/Ukraine - maybe but not a big fact at the moment. I like the idea of selling old crop and the first bit of new crop but that is me.

[charliep]

malleefarmer

You asked for prices so here goes. All are Alberta based. CWB old crop prairie spring wheat about $185/tonne (both forecast total payments and a fixed price contract). Domestic feed wheat prices about $20/tonne. New crop open market prices just over $200/tonne (CPS wheat).

Guys like Integrity_Farmer are going to be confused in the new world when they have to deal with a real export price. Mind you, they have dealt with real prices in the domestic feed market for years. Maybe the change won't be that big.

[charliep]

Forgot a zero on domestic feed wheat. Should be $200/tonne.

[charliep]

I should note the kind of wheat you talk about malleefarmer is 10 % ish of our production and many years is used in the domestic feed market. Lots of suggestion here (history will be the final judge) that better wheat price signals will mean an increase in the production of mid quality wheats in western Canada. Wider grade/protein spreads on hard spring wheat will make the pain of not achieving the top end more painfull. Our domestic feed industry and perhaps ethanol will also make higher yielding mid quality wheats a better alternative to our traditional CWRS varieties. Again, time will tell.

[malleefarmer]

charlie i dont understand winterkill obviously as we dont have it but when will these problems show up in 5 to 6 weeks time or later?

so prices could be choppy for a while yet before true extent is known.

another question charlie, canola is by the far the most profitable on the praries?

[charliep]

We don't know what will happen with a winter wheat crop until it breaks domancy which is March/April in the Oklahoma, Kansas, Texas or April/May here in western Canada. Similar in Europe. At this point, the comment would be the fall was less than ideal and the winter has put additional stress on an already stressed crop. Winter wheat is kinda like a weed and if conditions are favorable in the spring, it can play catchup. The land can also be switched to something else if killed off.

Canola is the most profitable crop in many farmers rotations but also the most expensive crop in terms of seed/inputs. The riskiest crop with risk being both pain and gain. Farmers need the extra revenue to justify growing. Having said, acres speak for themselves - western Canadian farmers make acreage decisions on profitability.

An economist speaking - farmers may have a different thought.

[cottonpicken]

For what its worth i see little downside 1 year
out,need to see a few things to fall in place for major
upside breakout.