The U.S. Department of Agriculture (USDA) believes wheat prices have the potential to increase during 2020.
During its Ag Outlook Forum, the department forecast wheat prices to climb to $4.90, an 8% increase from 2019.
“Wheat prices are expected up 35 cents to $4.90 to reflect low ending stocks,” says Robert Johansson, USDA chief economist.
The department expects a normal weather pattern with its forecast, as well as a slight drop in U.S. wheat acres.
“Of course, we know it’s fairly wet out there right now,” says Johansson.
Some analysts say there are certain factors which are currently supporting wheat prices.
“We didn’t get the acres harvested in the winter wheat areas that we thought,” says Bob Utterback with Utterback Marketing. “Then we’ve had some global production problems and supply problems. There’s also been hope China would buy more wheat in the trade deal.”
Utterback says he believes wheat is positive short-term.
“Wheat being double-cropped could be a very good long-term plan for 2021,” says Utterback. “For this year, it’s going to be tough to get wheat back to $6.”
Utterback says corn farmers want to see the wheat market to move higher, as he says that usually has psychological support for the corn.
During its Ag Outlook Forum, USDA economists talked about the department’s acreage projections for this year, showing a slight decrease.
USDA’s forecast is a total of 45 million acres for 2020. It’s not too much of a change from the 45.2 million acres back in 2019.
However, Arlan Suderman, with INTL FCStone says USDA may be a little high in its wheat acreage forecast this year.
“I think there’s a little discouragement in wheat country,” says Suderman. “I think acres will end up being a little bit lower than what USDA thinks.”
Watch the AgDay analysis clip for more information.