News & Commentary
The USDA supply and demand report estimates were certainly a yawner. No real changes, or surprises, boring! The same overall theme of poor exports and abundant world supplies have given us darned little to cheer about.
Any time the dollar gets strong, like it is today, commodities struggle price wise. It’s no real surprise that crude is tanking with a world awash in crude in conjunction with a strong dollar. As global commodities are traded in US dollars, a strong dollar tends to compound any surplus situation driving the prices lower and lower. That’s both good & bad news. Good news is that what we buy is significantly cheaper; bad news because in production agriculture the products we raise also tend to get shredded economically.
On the wheat outlook, prices are very defensive with the lack of exports to drive prices. Since the 2013/14 marketing year, wheat exports have declined from 1176 million bushels to an estimated 800 million this year. Most of that adds directly to our carry out keeping prices on the defensive. Without crop production shortfalls and/or a weakening dollar, commodity prices will be hard pressed to move substantially higher for some time.
Till Next Time,