Anderson Says Many Factors Dropping Wheat Prices

Jan 30, 2015

As the U.S. dollar continues to move higher, that’s hurting U.S. commodity exports. The stronger U.S. dollar makes commodities more expensive for foreign buyers. On this weekend’s edition of SUNUP, Dave Deken talks with Oklahoma State University Crop Marketing Specialist Kim Anderson about how the stronger dollar impacts wheat prices. Anderson said if the Euro was equal to the U.S. dollar, a $100 worth of wheat back in June and July, today would cost $119.

Anderson Says Many Factors Dropping Wheat Prices
In looking at the index of the U.S. dollar in comparison to other major currencies, that index has gone from 80 points last summer to 94.7 points this week.   That’s an 18.4 percent increase in the value of the dollar. If you convert that to bushels of wheat, Anderson said that’s about an additional $1.10 per bushel.

Over the past 15 years, the index of the dollar has gone up to over 120 points. Anderson said that’s another 28 percent increase in the value of the dollar or about another $1.75 per bushel increase. He doesn’t think that will likely return, as the dollar typically stays around the 80-95 range.

“It looks like it may go up into the 95 to 105, rarely does it go over 105 points,” Anderson said. “So I think we can pick up another 10 or 15 points on the dollar or it may just waller around in this range for a while.”

Wheat prices continue to move lower. Since the start of the year, prices have gone from about $6, now to about $5.10. Anderson said the March contract had support at $5.60, but has gotten down to $5.33. The July contract had support at $5.55 and has moved lower and that contract doesn’t have support until $5.15

“We’re on a hard, sharp down trend, it’s just no telling how low it can go, but it’s a long time between now and harvest,” Anderson said. “That’s the good news. There are a lot of time to go, but there are a lot of things going into the market. You got the foreign markets, you got the weather, you got the dollar, you got the funds. The thing to remember, it’s not going on what’s going on Oklahoma, Texas or Kansas, it’s what’s happening around the world that impacts our price now.”

This week on SUNUP, we revisit a popular SUNUP segment outlining the steps of hay ammoniation with Dave Lalman and the team from OSU’s North Range.

-- Kim Anderson covers wheat prices and how the value of the U.S. dollar has changed in recent months.

-- In Cow-Calf Corner, Glenn Selk explains how to recognize a cow may be ready to deliver a calf.

-- Then, Larry Sanders discusses Oklahoma’s oil and gas industry.

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