Randy Fortenbery, a Washington State University agricultural economics professor, is well known for his presentations on the markets. He appeared last month in a 2022 Agricultural Marketing and Management Organization (AMMO) seminar, but he also writes a regular column in Wheat Life, which in this issue, is very similar to his AMMO presentation. So rather than repeating ourselves, we’ll refer you to his column on page 46, for what’s happening in the export markets.
Fortenbery also talked briefly about the Price Loss Coverage (PLC) and Agriculture Risk Coverage programs, and since the enrollment deadline is quickly approaching (March 15), we wanted to share his thoughts there.
Before election either ARC or PLC, Fortenbery suggested growers look at the December futures contracts for soft red winter wheat.
“Why December? It’s halfway through the marketing year. So, it’s really the market’s best guess about what the soft red winter wheat price is going to be for the entire marketing year, in my opinion,” he said. “If I look at where it was recently, that’s $7.80, and I predict what the U.S. national cash price is going to be (it’s usually below the futures price), I’m saying we are still going to have a price between $6.50 and $7.10, $7.20 for the 2022/23 crop. If I’m right, PLC won’t come anywhere close to paying.”
However, ARC may not pay either, if prices are high and the crop yield is at least average.
“But anything can happen in the next 18 months, so I could be very wrong by the end of this,” he added. “That’s the best guidance I have. Look at those futures price for December delivery when you get ready to sign up and think, if the futures price is $7,80, that’ll end up being a cash price of, in our area, probably a dollar lower, and am I comfortable with that?”