— From the Times Record News
Hanaba Munn Welch
If farmers have a mantra, it’s “There’s always next year.”
After a disappointing harvest this spring, Texas wheat growers already have shifted their attention to next year’s crop — better than crying over spilt milk, which also could be their mantra.
Daniel O’Brien, extension agricultural economist with Kansas State University, gave some area farmers an opportunity this week to hear an analyst’s outlook for the next crop year and to ask questions.
Inflation is likely to influence the price of wheat, O’Brien said to a group meeting in Abilene.
“So much of what we’re looking at continues to be influenced by factors beyond agriculture,” O’Brien said, mentioning the potential for inflation to occur during the next 12 to 18 months. “The odds seem to be more in favor of inflation happening than not.”
The phenomenon is a two-edged sword for U.S. farmers.
“If the dollar buys less, prices for commodities go up — for food and everything else,” O’Brien said. “If we see inflation … for the things we’re selling, we’re better off. For the things we’re buying, we’re worse off. The most important question might be … how the volatility of our financial situation here in the United States will be affecting our commodity prices.”
Even though this year’s wheat crop is cut across the North Texas wheat belt, not every bushel has been sold. Farmers who stored some or all of this year’s crop stand to profit if the price of wheat goes up. Lately it has been dropping. A good crop in Kansas — no surprise — is one reason the per-bushel price for hard red winter wheat has fallen from about $7 at the beginning of June to the mid-$5 range now. But other factors also influence prices.
The big economic picture is O’Brien’s specialty. His analysis of the global wheat market takes into account decades-long production trends.
“It seems we’ve been in the process of falling off price-wise from the 60-year low in stocks,” he said, putting peak 2007 prices in the context of history.
“You’ve got the output taking a big jump coming out of 2007-2008,” he said. “A fair amount of it came from the European Union.”
Increases in wheat production in other parts of the world are bad news for American wheat farmers. An increase in global wheat consumption is good news.
“Since the total usage of wheat has remained strong, at least if there’s a brighter light for the future … as a staple in world diets, it’s remained pretty strong,” O’Brien said. “If world usage declined, up here in Kansas we’d be in a world of hurt.”
In wheat exports, the United States is a major player.
“We are projected this year to handle about 20 percent of the world’s exports,” O’Brien said. “We grow about 8 percent of the world’s crop, and we have about 10 percent of the world’s ending stocks.”
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