Wheat Market Ponders Benefits from Rain
High prices sometimes means someone has to suffer and hard red winter wheat growers know rising prices bring that truth this year.
Bryce Knorr
Published: Mar 23, 2009
High prices for farmers most of the time result from somebody else's losses. That's the troubling notion hard red winter wheat growers face this year: If prices are going to rally, they'll probably have to suffer.
Rains continue to follow the pattern seen for storms since the crop was planted last fall: Rains again skirted the driest areas in the southwest, where some fields are ready to be written off. Overall, however, the crop is in average shape, which is all the world needs this year.
Forecasts for the rest of the growing season don't look like they'll break the weather pattern. So, if normal production, more or less, is achieved, rallies this spring won't last long, with a top coming a week or two after the first nationwide ratings are put out in April. Chicago July wheat at $6 and Kansas City at $6.40 to $6.55 look like plausible targets, unless crop ratings show a sharp decline.
Minneapolis futures could have longer to run, depending on the effects of the spring snowmelt flood. For now, target $6.80 to $7 September futures.
For now, producers should be crunching expected yields to see if their crop insurance will be enough to offer a break even. If not, use rallies to get more price protection in place.
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