CHATTANOOGA, OKLAHOMA. Wheat was exceptional here as the season came to a close. It offered good grazing for stockers through February and, when harvested, yielded up to 80 bushels per acre in some fields. The marketing side of the wheat business, however, has been more challenging.
The Goodknight operation has a niche market selling certified wheat seed, some years adding up to over 100,000 bushels. Demand is down, leaving Cody Goodknight looking for ways to boost sales.
"It has been a challenge to get people excited to plant wheat in this market," he says. "Seed orders have definitely been slow."
To adapt, Goodknight has lowered the certified seed price to be more competitive with noncertified seed and alternatives like rye or triticale. They've partnered with Indigo to provide multiple seed-treatment options, and they're advertising to widen sales reach. What they aren't going to do is give up on wheat.
"We are sticking with our crop-rotation principles," Goodknight says. "We plant half to wheat, a fourth to cotton and a fourth to soybeans or milo. We also bring in stockers for winter pasturing when we have enough moisture to carry them. And, we raise and sell bred replacements and 2-year-old cow/calf pairs."
The producer believes this level of diversification makes a difference in his family's ability to stick out the hard times.
"We want to take advantage of every market we can so we don't put all of our eggs in any one basket. Diversification helps with that," Goodknight explains. "It is also beneficial to the land, helping with things like weed resistance. When you are thinking long-term, you need to think about a strong mix of income streams."
Wheat Outlook 2020 from DTN Analyst Todd Hultman:
> BEARISH ELEPHANT IN THE ROOM
The largest part of the U.S. wheat crop is hard red wheat (HRW), which drives the base price for the industry. The big, bearish elephant for 2019 wheat prices is USDA's record-high ending world wheat stocks estimate of 10.5 billion bushels for the 2019-20 season. That is too large of a surplus for the market to ignore.
> EXPORTER ANALYSIS
A more specific indicator of where the wheat market goes is found in ending wheat stocks for the top eight global exporters for the commodity: Argentina, Australia, Canada, the European Union, Kazakhstan, Russia, Ukraine and the U.S. None had large changes in ending stocks, just small adjustments -- 2.28 billion bushels in 2019-20. This is the lowest in six years by a narrow margin.
> OPPORTUNITY STRONGEST IN SPRING
Bearish factors in this market are well-known and reflected in 2019 fall prices. Seasonally, winter wheat prices tend to trade higher early October to early March as commercial traders raise bids to entice supply during winter. It is reasonable to expect that pattern again in early 2020, but don't look for July 2020 KC wheat futures to trade over $5. Anything over $4.75 is apt to be a good sale.
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