Farm406

reason for this below), which would limit the potential for international sales. This may keep HRW exports from reaching their longer-run averages and may limit the upside for HRS exports. 2. Protein premiums in the 2019/20 marketing year will recover due to wetter production conditions in the central Plains and Canadian prairies. Why I think this is correct: The 2018 production year was particularly good for high-quality wheat. This, in turn, has substantially reduced the premiums for higher- protein wheat. Two important factors (among a number of others) that my research has shown in impacting these premiums are the production conditions in the U.S. central Plains and the Canadian Prairies. If wheat produced in those locations has high protein content, then protein premiums across the U.S. will be relatively small. Next year, long-term weather projections by the U.S. National Oceanic and Atmospheric Administration (NOAA) and Canada's Environment and Natural Resource office indicate higher probabilities of average and slightly above-average temperatures and above-average precipitation during May-July in the central Plains and Prairies. You can check out the U.S. details and Canadian details via the links, but the precipitation maps are also provided below. Why I think I might be wrong: Above-average precipitation and good temperatures are quite good things for crop production. If farmers increase fertilizer rates or the extra moisture increases the uptake of fertilizer by the plants, we could see both higher yields and higher protein levels. If that's the case, protein premiums may not be particularly high. 3. Overall U.S. wheat prices are unlikely to move particularly far from where they have been during the early parts of the 2018/19 marketing year. Why I think this is correct: There really doesn't appear to be much happening that would lead to particularly much optimism or pessimism for wheat prices. While the global demand for higher-quality wheat remains strong and will keep the United States as a consistent supplier of that product for international buyers, continued uncertainty about U.S. trade policy, high stocks of soybeans and corn, and congested transportation systems are likely to place a ceiling on wheat prices. Additionally, in its November market report, the International Grains Council noted that global wheat plantings and production are likely to increase by approximately 1%. This is the first increase in wheat plantings in five years, which may further limit wheat price rises in the early parts of the 2019/20 marketing year. Price projections posted by the USDA Office of the Chief Economist and the Food and Agriculture Policy Research Institute also indicate that prices are likely to remain flat. The two most recent reports forecast average prices to remain between $5.10 and $5.20 per bushel across all wheat classes. Why I think I might be wrong: In general, price forecasts are almost always incorrect or, at the very least, imprecise. However, planting decisions in the Midwest and central Plains may add downward pressure on wheat prices. If the U.S.-China trade dispute continues deep U.S. May-July Precipitation Forecast Canada May-July Precipitation Forecast The increased precipitation and favorable temperatures in the major wheat production areas is likely to result in higher yields but also possibly lower protein levels, due to an often-occurring inverse relationship between wheat yield and protein. If that turns out to be the case, lower supplies of higher-protein wheat would result in higher prices for wheat that does contain the desired protein content. farm406 46

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