HIGHLAND, Ill. — Wheat producers sitting on their grain may
want to keep an eye on the political unrest in Egypt, according to farm
economist Dale Durchholz.
The senior market analyst at AgriVisor LLC in Bloomington
told farmers gathered at the Illinois Wheat Forum that stability in that country
could have an effect on markets in the U.S.
“That’s the daunting question mark that hangs over everyone
in the world: What about Egypt?” he said. “They are one of the big buyers.
Typically, they are the biggest buyer, and right now with all the violence they
have become absent once more.”
A good crop in the U.S. this year coincides with high
production elsewhere in the world, but Durchholz doesn’t foresee prices falling
precipitously anytime soon.
“We’ve got a lot of competition out there,” he said. “Europe
is having an excellent crop also at this time. But soft wheat is probably OK.
We’re due for a nine-year low, but the downside risk is pretty thin.”
He believes prices won’t likely fall below $6 per bushel in
the near future.
“If we get back to $7, that’s going to be our road to go
uphill. We’ll get somewhere in the mid to high sevens again,” he said. “We still
have wheat on hand. It’s a better crop to store than corn because it’s got a
carrying market. Wheat pays to carry it, and when you decide to sell it, look at
those cash bids and hang on to it.”
Overall, crop prices should remain healthy over the next few
months, though some of the volatility in the markets may have passed, according
“The crazy markets we’ve had have probably gone by the
wayside,” he said. “We can see these prices again, don’t get me wrong. We can
see $16 to $18 beans and $6 to $8 corn again. But be more disciplined about how
you move your marketing program. We’ve probably captured the high side of the
The U.S. Department of Agriculture is projecting an average
corn yield of 154.4 bushels per acre and total harvested acres at 89.1 million.
But Durchholz warned that those figures should be taken with a grain of salt
“There was a lot made last week about FSA planting data,” he
said. “Beware, those are preliminary numbers. They get compiled as they go
through time. This is only the third year we’ve had access to the preliminary
“Last year, that data was compiled a little faster than
normal in a lot of places. This year, we had later planting, so the reporting
came later. But it’s going to be hard to get under yields of 152, 153 bushels.
It amazes me how well the consumption fits the trend. Production outside the
U.S. is going up faster than consumption.”
One question on the minds of market analysts is the
mini-drought in some places in the Corn Belt following a wet growing season and
the recovery in the Plains states.
“The market is very much concerned about the fact that we’re
drying up at the end of the growing season,” Durchholz said. “They are dry out
there in west-central Iowa, but they’ve still got potential. One grower said if
he gets 2 inches of rain this week and maybe another later, he will have 170
bushel corn — if not, 100 bushels. That’s where we’re at out there. The cool
weather we’ve had this summer has masked some things.
“One thing that is important to (wheat growers) is Kansas.
What happened to the drought? What’s going to happen when planting time comes? A
lot of hard red winter wheat will be going into the ground. The drought has gone
by the wayside. We still have issues in Nebraska, northern Kansas and other
areas. We’re going to plant a whole lot of winter wheat.”