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[AgriLife Today] Marketing opportunities may materialize for wheat despite low prices, high stocks

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By: Kay Ledbetter

Writer: Kay Ledbetter, 806-677-5608, [email protected]
Contact: Dr. Mark Welch, 979-845-8011, [email protected]

AMARILLO – The U.S. has a pile of wheat to dig through this year, and that means lower prices. But a Texas A&M AgriLife Extension Service economist said world circumstances could present marketing opportunities in the coming year.

Dr. Mark Welch, AgriLife Extension grains marketing economist in College Station, spoke at the recent Texas Wheat Symposium during the annual Amarillo Farm and Ranch Show in Amarillo.

“We will be moving in the right direction going forward,” Welch said. “The strong increase we are seeing in grain consumption around the world will help us move through some of this oversupply.”

He said grain consumption has risen over the years due to growing average incomes in some countries where the middle class has expanded.

“Projected economic growth is around 3 percent in a good portion of the world, including Asia, Africa and South America, and that’s good for what we do,” Welch said. “Wheat use is growing at 1 pound per person per year, in addition to population growth of about 1 percent each year.”

Heavy wheat supplies are a result of four consecutive record wheat crops, which has only happened one other time in history, he said.

“We currently have a 124-day surplus of wheat on hand, while carryover stocks of the other crops are very close to their average,” Welch said. “Given the strong consumption base, wheat is the only one showing a strong supply while the others show vulnerability in the market.”

He said at this point only China is showing potential for a production problem in 2017 across the world. China is a net importer of all major commodities, so this could present some marketing opportunities for U.S. wheat.

The U.S. continues to see strong export sales in spite of large local supplies and a strong dollar, Welch said.

“In 2017, the most important question will be acreage. We planted the lowest winter wheat acreage in 100 years last year and expect even fewer for 2017.”

With a drier-than-normal weather outlook, along with warmer-than-average temperatures in the High Plains, Welch said it is setting up to be a year of marketing opportunities for wheat producers.

“I expect some degree of lower production worldwide,” he said. “That combined with continued growth in consumption points to somewhat higher prices in 2017 compared to 2016, though likely not enough to cover total costs of production.”

“I expect wheat prices to be about $1 per bushel higher next year if we get a cut in production and the wheat-to-corn price relationship returns to more normal levels. Wheat is currently priced much lower relative to corn compared to historical averages.

“But it does present us with some marketing opportunities,” he said. “The big money players are currently betting on higher prices turning the market around.”

Welch said producers must know what they have in their crop and be able to recognize the situation when it occurs if they want to be able to take advantage of any opportunities that materialize.

“Nobody really knows where prices are going to go. Economic theory teaches that prices will fall back to the cost of production, which means you need to be the lowest-cost producer. That and monitor the market for opportunities.”

 

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Farm & Ranch

Meanwhile, Back at the Ranch…

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By Rayford Pullen | [email protected]

When May arrives, we start thinking about weed control. With two years of drought under our belts, grass grazed short and hay stocks depleted, what we do now will influence our forage conditions for the entire year. With 75 percent of our annual warm season forages made by July 15 in North Texas, we need to get the grass growing while the sun shines.

Speaking of the sun shining, the biggest deterrent to growing lots of grass is restricted sunlight, and the biggest sun blockers we have are weeds.

Have you noticed weeds are normally just slightly taller than your grass and are probably blocking 90 percent of the sunlight from reaching the grass itself? So obviously, we need to improve conditions, so sunlight reaches the plants we want to grow.

With grass extremely short, more sunlight is hitting the soil surface now, which in turn results in more weed seed germinating. With the moisture we have received, we expect an abundance of weeds this year.

To read more, pick up a copy of the May issue of NTFR magazine. To subscribe by mail, call 940-872-5922.

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Farm & Ranch

Land Market Report: March Land Sales

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By Jared Groce

Rural land sales are continuing on a steady pace for early spring, with prices holding very strong with the sell-to-list price ratios remaining very high, even on properties that have been on the market for a longer than usual time period. The total number of transactions are picking up once again as the spring selling season kicks off, and the average acreage continues to decrease.

Larger acreage properties seem to be in higher demand than smaller properties currently, with many buyers simply parking cash in real estate to hedge against inflation. Interest rates seem to have settled down and most experts agree that rates will be reduced by the fed this year. Some lenders have programs in place that allow the buyer to reduce their rates without having to go through a full refinance ordeal.

To read more, pick up a copy of the May issue of NTFR magazine. To subscribe by mail, call 940-872-5922.

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Farm & Ranch

Texas FFA State Vice President Weston Parr

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Future Farmers of America was founded by a group of farmers in 1928 with the mission of preparing the next generation of agriculture. It has done just that during its 95-year history, as the organization works to give back to others by following its motto, “learning to do, doing to learn, earning to live, living to serve.”

FFA is an organization made up of state associations, and at the helm of the Texas FFA is a team of 12 officers representing their respective areas within the Lone Star State. These individuals dedicate a year of their lives as they serve members, provide leadership, and work together with the state staff and board of directors to develop policy and lead the organization of over 177,000 members.

North Texas is represented by Area IV and Area IV, stretching from Wilbarger County to Bell County and from Runnels County to Grayson County. This year, those chosen to lead this great area are State President Isaac Hawkins Jr., Area IV, and State Vice President Weston Parr, Area V.

Parr is from the Sam Rayburn FFA chapter and the Area V Association, but the leader who now serves more than 19,100 members of Area V entered the FFA organization as a shy teenager who sat in the back of the room.

“I didn’t talk to a whole lot of people. I didn’t know what I wanted to do with my life or where I could see myself, so I wasn’t involved on my high school campus,” Parr recalled.

“Then I started FFA and slowly but surely, my ag teachers worked me into attending more contests, meeting new people, and speaking. I remember the first time I gave an officer speech to my chapter. I can still remember how embarrassing it was. To see the progression from that moment to speaking on stage at the state convention in front of thousands of people. Now I feel like I can enter the industry I want and be successful all because of what FFA afforded me for five years.”

There is not much Parr did not do during his time in high school. His contest participation included chapter conducting, wool judging, cotton judging, wildlife, and job interview, but his favorite was extemporaneous speaking, which he did not start until his senior year of high school.

“I wish I could go back to my freshman, sophomore, and junior years and start that sooner. I think if I had more time, I would have been more successful than I already was, but that was something I didn’t realize I liked at the time. I’m not naturally somebody who likes to speak in public, but it was actually my favorite,” Parr said.

Parr won several awards during his time competing. In 2023 alone, Parr earned the Texas FFA Service-Learning Proficiency title, was a National FFA Service-Learning Proficiency finalist, and a Texas FFA Extemporaneous Speaking finalist. In addition to his CDE and LDE events during high school, he showed commercial steers at Houston, and boilers at most major shows, participated in the county show with projects in ag mechanics, showed goats from time to time, and showed heifers until graduation.

“FFA provides invaluable resources and knowledge to be successful once you leave high school and you are out of the blue jacket for the first time. I have been a part of a lot of great organizations over the years, and they are all great in their own way, but in my opinion, FFA is the most successful at producing members of society who want to go and do something with themselves,” Parr said.

He was halfway through his time as Area V Association President and attending the national convention when he began to ponder the idea of running for state office.

“This is around the time when you usually figure out if you want to go through and be a state officer or you decide that area officer is your last run. I was unsure of where I wanted to go, but I knew I didn’t want to be done with FFA. I decided maybe it would be a good opportunity not only for me to make more friendships and connections, but also to give back to the program that allowed me to be able to do what I can do today,” Parr explained.

To read more, pick up a copy of the May issue of NTFR magazine. To subscribe by mail, call 940-872-5922.

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