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Low Wheat Prices to Continue, Economist Says by Matthew Weaver Capital Press, February 4, 2016

Washington State University small grains economist Randy Fortenbery says wheat and beef prices
aren't likely to recover to higher levels in the next few years due to large global supplies.

SPOKANE -- Northwest wheat farmers will have to rethink the definition of a "good" price during the next few years, a Washington State University economics professor says.

Farmers were not happy with wheat priced at $5.99 per bushel last year, said Randy Fortenbery, professor and small grains economist at WSU.

However, USDA forecasts average wheat prices at roughly $5 per bushel this year.

"When you see prices much above that, even if they may not be the kind of price you would have taken two or three years ago, that might actually be a sales opportunity," Fortenbery said. "When you see prices below that, you might want to be more patient, because if USDA is right, the price should average $5. Something below that could be beaten sometime during the marketing year."

The problem is a large global supply of wheat, plus a strong U.S. dollar in comparison to competing countries' currencies, putting the U.S. at a disadvantage on the export market, Fortenbery said.

"In many cases, we are the most expensive person selling wheat in the world market," he said.

Fortenbery expects prices to remain low for the next two years. If weather proves to be beneficial for national and global production, it will negatively affect prices, Fortenbery said, because it will add to the supply while demand is low.

Farmers are storing their wheat in hopes of seeing higher prices, Fortenbery said, but any increases aren't likely to cover the cost of storage.

"This is the year where that's probably not going to pay," he said. "You're not going to get rewarded for storage unless something really unexpected happens."

A weather problem, animal health crisis or political issue would potentially create selling opportunities for U.S. producers, Fortenbery said.

Fortenbery recommends farmers consider selling wheat they store during brief price rallies.

If farmers start to see forward contracts for wheat in the $6.35 to $6.50 per bushel range, they should try to take advantage and sell, as they will not likely see prices that high at harvest, Fortenbery said.

He offered his economic forecast during the Spokane Ag Expo and Pacific Northwest Farm Forum on Feb. 3.