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Caution on 2011 Wheat Planting

August 12, 2010

Wheat futures prices are very attractive, says H. Scott Stiles, economist at the University of Arkansas, Division of Agriculture. "What may keep acreage expansion subdued is seed availability. SRW acreage was down so much last year and this has had an impact on seed quantities available for fall 2010 planting.

"Another issue is basis," he says. "As futures prices continue to surge, the 2011 basis widens further. Today, the basis for June/July 2011 delivery to the Mississippi River at Memphis is 80¢ under July 2011 CBOT futures. It’s more than $1 under further out at the country elevators. This is leaving growers with new-crop bids around $6.55 in some areas.

"I caution growers to do their homework; look at their basis, yield history, production costs, and rent arrangements. There is not an automatic profit in wheat at these prices."

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