(Jamie) Good morning and welcome back to Farm Factor at the Wichita Farm and Ranch Expo. Today Duane Toews visits first with Pete Loewen about wheat.
(Duane) Duane Toews joining you once again on AGam in Kansas. And while at the Wichita Farm and Ranch Show we hosted the Market Shootout IX, an opportunity to hear from the market analysts on KFRM about different topics that they spoke with producers that night. We take the opportunity to talk specifically with Pete Loewen, Loewen and Associates. And Pete, certainly a time of the year when a lot of people are looking forward with the next year’s crop. (Pete) Definitely. And you know from a market standpoint we went through a summer when we were pretty wet throughout Hard Red Winter Wheat country. Then it dried out. People trying to get wheat planted. And there were a lot of marketing opportunities going into that, not having so many production uncertainties. Then we caught the rains in late October through a big part of wheat country anyway, through the high plains and down through south Texas and in through central Oklahoma. Of course it skipped a big chunk of northern Oklahoma and Kansas. But then we caught those and then low and behold, you sit here with historically very low prices and now you get some production potential but no sales opportunities it seems like. (Duane) Obviously we’ve dealt with that with last year’s crop. Looking ahead world wheat numbers, there’s plenty of it out there. And it may be a little tricky to market to 16 profit. (Pete) There’s no doubt. You know we’ve got world production, it’s record large. Close to 27 billion bushels and we try to put the U.S. into perspective with that. We raise about two billion, plus or minus bushels of wheat per year, compared to 27 in the world. And over time the U.S. has accounted for less and less of the world export trade as well. But basically we produce about eight percent of the crop and export about 14 percent of it. So wheat has become a very global market with everybody able to grow it. And when you’ve got big world supply and you’ve got adequate U.S. supply, it makes it tough from a price standpoint. (Duane) We think about this fall, pretty dry through the northern sections of the wheat belt, a little wetter down to the south. You guys still have not got that crop up yet and some uncertainty as to how far do you go in terms of marketing next year’s crop when you don’t know what you’ve got. (Pete) Well one, there’s obviously production uncertainties still. We get wheat crop conditions on a weekly basis now. And even after the rains didn’t improve as much as what people anticipated I believe. But we’ve got a major dilemma in the fact that we’ve got prices at historical low type levels, compared to where we’ve been the last eight to ten years. And in a lot of instances costs that are…or price that’s below production costs. So, tough, tough circumstance for wheat. You hope you’re gonna produce it. You really don’t like the price opportunity that’s being offered to you in the market right now. (Duane) You look at the value of the U.S. dollar as strong maybe now as it’s been in quite some time. That doesn’t help us on the export scene either. (Pete) It doesn’t help us at all. In fact through the last several months our weekly export sales of wheat have been very poor. And the last report we had in November, USDA cut wheat exports by about 50 million bushels but in my opinion it’s going to be cut more than that. Typically in most of the larger wheat export tenders that we get lately, U.S. wheat values from exporter are anywhere from 40 to 80 cents above per bushel higher than other competing world exports. Which obviously makes it difficult for anybody to want to buy our wheat. (Duane) Our thanks to Pete Loewen joining us at the Market Shootout in Wichita at the Farm and Ranch Show. Jamie back to you.
(Jamie) Folks, stay with us – Duane will be back in a moment with Derrick Hermesch.