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Uncertainty the Name of the Game with Wheat

November 7, 2012
11 7 12 Texas wheat pasture
Some early-planted wheat was already up and grazeable by late October. (Texas A&M AgriLife Extension Service photo.)  

By Robert Burns, Texas A&M University

Texas wheat growers may have some hard decisions to make this winter because of market and weather uncertainties, according to a Texas A&M AgriLife Extension Service marketing expert.

Much of the uncertainty in prices stems from the drought, Waller said. Most of the state’s wheat got a boost from late-summer, early fall rains, with much of the crop emerged, and some already grazeable, said Dr. Mark Waller, AgriLife Extension economist in grain marketing and policy, College Station.

"From a traditional standpoint, grain prices are high," he said. "We’ve been trading in a kind of sideways pattern since June, if you look at future market prices. A lot of that is because grain supplies are tight, and not only wheat supplies. If you look at what happened with the drought in the Midwest, we’re likely to see pressure for more wheat to go toward feeding because there is a shorter corn crop."

 

"Some of those look like relatively profitable decisions now," Waller said. "With prices at these levels they at least have something to consider — it’s better than having low prices, but there’s a lot of uncertainty right now."

And there’s continued uncertainty when it comes to winter weather. As recently as late August, forecasters, including those at the National Oceanic Atmospheric Administration’s Climate Prediction Center, were expecting a stronger-than-average El Niño to develop in the tropical Pacific. A strong El Niño would have increased the chances for a wetter than average winter, which is exactly what the crop needs, Waller said.

Most experts agree, he said, that because soil-moisture levels were severely depleted during the 2011 drought, this year’s crop will need greater-that-average rainfall to show an average performance.

"The markets by this time would usually start to decline, but we’re still looking at enough uncertainty, especially with changes in the weather forecast, that we may not see as much rainfall as earlier expected this year," he said.
 

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RELATED TOPICS: Wheat, Agronomy, Crops, drought

 
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