cancel
Showing results for 
Search instead for 
Did you mean: 
Palouser
Senior Advisor

Why I'm waiting for fireworks in MY market

The amazing thing is how little awareness there is on this issue in the PNW. There is very little market commentary out here that's not essentially proprietary and from the buyside - or uses national wheat perspectives that don't really apply to our regional wheat variety that is mainly exported to the Pacific Rim for specific uses. Keep in mind that SWW went parabolic in 2007-8 to $12-15 before freezing up. At that point we were also supported by similar supply issues of HRS, and even corn and beans were supported by the situation for awhile before dropping away.

 

Mum's the word out here Smiley Tongue

 

 

SWW Supply-Disappearance.jpg

0 Kudos
9 Replies
Palouser
Senior Advisor

Re: Why I'm waiting for fireworks in MY market

Washington State is one of the bigger winter wheat producing states and yet does not get reported in the USDA winter wheat condition survey. For this reason the USDA did not catch on the the plunge in production due to winterkill last year. Even more ridiculous, the situation is compounded because they don't evaluate the condition of the wheat the rest of the year either. The poor winter was followed by a hot summer that further worsoned the wheat condition.

 

USDA kept the same projections for production the entire year until AFTER harvest even though the problems were 'in your face'. The Spring White Wheat did rather poorly also. And I'm not sure they lowered it enough. Which means the situation in the graph above may be optimistic for supplies.

 

I'm finally beginning to understand how isolated and misunderstood the SWW situation is - even though it is quite a compact region. It's part of the reason the farmers in this region are poorly served with information specific to this area and class. I'm guessing the Japanese might know more about it than the USDA.

 

By the way, we have more production problems this year though the extent isn't clear yet.

 

 

0 Kudos
ihtractortherap
Senior Contributor

Re: Why I'm waiting for fireworks in MY market

HO HUM says the market
0 Kudos
northnd
Senior Contributor

Re: Why I'm waiting for fireworks in MY market

I am with you 100%.  EVERY custom harvestor I have talked to has said the winterwheat crop from Texas through Kansas was bad.  Really bad.  That there is no way the ending stocks should be pegged where they are at. However, I have come to realize through the years that the market doesn't care about true numbers.  They care about making money, and if the numbers are false it doesn't really matter because they will just make money on those pie in the sky numbers.  The system is broken, but those lowest on the totem pole are the only ones really affected because most everyone else will just use the false numbers to make money.  I guess we can do that also, but I am currently farming the land my neighbor used to because he thought he had the ability to trade those false numbers.  It is what it is I guess.   

0 Kudos
ihtractortherap
Senior Contributor

Re: Why I'm waiting for fireworks in MY market

New low for soft red. Exports were decent. Whats the market trading???
0 Kudos
Palouser
Senior Advisor

Re: Why I'm waiting for fireworks in MY market

I think the market trades 'there's enuf', 'there's plenty', 'threats to supplies are overdone', 'and 'whoops, maybe not' and finally, 'where are we going to get more after we scrape this load together?'.

 

My market is going to the last, but the rest of the market isn't in that position, more like 'there's plenty'. At least until there's not.

 

On the other hand the line between the positions isn't really that great. The change in trading attitude can be completely different by the next season. For instance, I don't know what the premiums are for hi pro spring but I'll guess it's pretty healthy if you're lucky enough to have 15%.

0 Kudos
northnd
Senior Contributor

Re: Why I'm waiting for fireworks in MY market

Yes, thats true, but the numbers they use whether wrong or right don't really matter to them it's just a perception thing.  Within in a 100 mile radius of me 15% will get you a $.75/bu premium.  At 13% protein it is a $1.00/bu discount.  Problem my wheat is right at 14% protein but I have a $.76 discount for damage and VOM.  Right now that nets me $4.55/bu net.  YUCH!

0 Kudos
Palouser
Senior Advisor

Re: Why I'm waiting for fireworks in MY market

I guess things have changed. The premium was sky high for awhile.

 

Although the wider market is not sympathetic to my market the reality is that Pacific Rim importers will be charged a bunch to get exporters to scrape together loads of SWW. That's the reality. We don't harvest until July and August depending on elevation, the higher producing the most wheat. The exporters try and keep the raise in price to importers for themselves, and in the past have charges between $1-2 bu  JUST to load the ship! The harder it is to pull together the loads the more per bushel the exporter makes.

 

First the exporter tries to keep quiet the margin they are making to keep farmer's from realizing the price has to go up when supply starts running out. When the supply is in strong hands the exporter charges the importers enough to entice enough product onto the market AND get a high premium margin. It's under these conditions that the game turns from a volume/low margin market (usual for grain commodity market) to a high margin market.

0 Kudos
sw363535
Honored Advisor

Re: Why I'm waiting for fireworks in MY market

Thanks for the good thoughts Palouser.

 

But be careful, you might get to sounding too much like me on that usda stuff.   🙂

 

    IMO usda has been very detatched from reality since the day they stopped paying any attention to data gathered at the FSA offices.  And ffor that matter stopped gathering data and became an insurance/food assistance department.  There is very little "gathering" of information since we decoupled payments from actual planting data and froze history in '96.  Especially in respect to wheat.

 

Even on this board wheat has become a seldom noted footnote among those who report the "news".  We may get caught flat footed at some point.

0 Kudos
sw363535
Honored Advisor

Re: Why I'm waiting for fireworks in MY market

And you point about News sources is a good one and is true accross the commodity board at times.

0 Kudos