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Farm
Bill Flash
Issue 24 - November, 2000 - Page 3 |
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In this market, there are likely to be “spikes” caused by weather scares and new crop information. As with the recent price increases which were in part based on the “drought scare” in the Midwest, they can be quickly reversed if countervailing information shows up (Graph 4). The weight of U.S. and European wheat stocks is likely to hold upward swings in check. It is more likely that the underlying conditions of the market will overcome any short-term movements until the long-term implications from next year’s crop are clear. My own expectation is to see a slow slide upwards as we near the “weather market” season which could start any time but is more likely after the first of the year. The mid-January USDA Wheat and Rye Seeding Report is the first USDA estimate of U.S. wheat acreage. The market will respond to the numbers it contains (see “Web Resources” on page 5 for address). The next Quarterly Grain Stocks Report, which is released on the same day as the Winter Wheat and Rye Seedings Report, will indicate if sales are running ahead of predictions or behind. These reports often offer a pricing opportunity. Crop condition reports and rainfall reports will take on increased importance this year because of the World wheat stocks level. Don’t pass up a chance to price new crop above the loan rate just because you are hoping for a “better yet” opportunity. While the odds are better this year than the past 4 that prices will rise some and stay there, they aren’t perfect. The odds of prices increasing more than $1 per bushel in any one year are not very high. If one can lock in a profit rather than speculate on a bigger profit, financial wisdom would say take the profit. Finally, whether your crop is priced or sold or not, follow this market carefully. It is hard to imagine that there will not be pricing opportunities for new or old crop as the “players” speculate about next year’s crop in futures and cash markets. The upward swings may not last. If you aren’t following the USDA Supply and Demand Reports (available off the Web at http://pnw-ag.wsu.edu/Markets/markets.htm), reading carefully a professional market report, or aren’t keeping in touch with your marketing professional, now is a good time to start. With the uncertainty in the market, things may jump around a bit before they settle down, and they may not settle down till next fall. If you are not following the market closely, you may miss whatever price increase there happens to be. The information is available, all it takes is a bit of time. As an economist, I’d say the return to the time spent keeping up on the market will either make you money or will shorten the losses. In either case, the benefit to you will be far greater than your cost and will likely bring greater benefit per hour than the next best thing associated with your farming operation that you could spend your time on. |