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

What Might El Nino have in Store for Wheat?

Wheat Image

by David Widmar

One of the biggest stories of the summer was the strong El Nino conditions. By several measures, current conditions are among the strongest El Nino measurements in history (Secord or third highest since 1950). Recent media articles have also citied El Nino related agricultural production issues to higher dairy, sugar, palm oil, and wheat prices. It appears, however, that the most significant impact will occur this winter.

This got us wondering how current El Nino conditions might impact the winter wheat crop. Similar to our post earlier this summer, which considered corn and soybean yields, this week we take a look at historic El Nino conditions to glean potential insights for the US winter wheat crop. Continue reading