LUBBOCK, TX – The last time there was a runup like this in the wheat market was March of 2008, and given fundamental concerns around the globe, Dr. Mark Welch says today’s current price levels – especially in hard red winter wheat – make sense.
Welch is a Texas A&M AgriLife Extension Grain Marketing Economist and explains that with the concern in Ukraine and Russia, if those two countries are unable to pull at least a normal crop this spring, then global wheat supplies will tighten to a level last seen 15 years ago.
On the other side of the coin is India, not normally a wheat exporting country, but Welch says after four or five record crops in a row in that region, any losses in the Black Sea region could be filled by Indian wheat.
Current stocks of wheat, expressed in days on hand, are at 130 days while in 2008 there were only 80 days on hand globally. Welch says that if you remove all the production from both Ukraine and Russia, the stocks fall back to 80 days on hand and although he doesn’t expect this to happen, says it shows just how volatile the wheat market situation is.
(SOURCE: All Ag News)