Wheat Basis Begins Recovery

by David Widmar

While the economic outlook for U.S. agriculture has been bleak in recent years, the challenge has been especially difficult for wheat producers. As evidence of these tough times, U.S. wheat acres, which have trended lower since the early 1980s, tumbled to new lows in 2016 and 2017. Furthermore, Brent previously examined the relationship between wheat and corn prices and found current wheat prices are historically low.

One of the most evident challenges wheat producers have faced in recent years has been a historically large gap between future prices – the price traded on the board of trade – and local cash prices. This difference –known as ‘basis’ – has been historically wide and creates challenges for producers’ marketing plans. This week’s post considers wheat basis data at three locations to look at the current situation as well as historical conditions. Continue reading

Grain Pains on the Plains; A Look at Production

Rail3

by

David Widmar

Rail shipping issues on the High Plains have been the focus of several media stories. The challenges have even created political interest (here and here). While the situation is very complicated, the slow rail shipment of grain has created local pricing issues.

Several factors have contributed to the situation (including shipping demands associated with crude oil), but the purpose of this post isn’t to pull all those apart. Instead, we wanted to focus on how grain production has changed in this region.  Previous posts have considered broader, nationwide, aspects of this trend, including large increases in the number of corn acres planted and decreases in CRP acres. These two trends, collectively, led us to wonder what has happened to grain production on the High Plains.

Continue reading