Market Report Update 3-27-17

Market Trends

Weekly Market Highlights

  • Wheat futures and basis premium prices fell this week reflecting at least a temporary ease of weather concerns and a lack of demand for wheat coming to market.
  • Rail transportation costs have fallen from high levels supported by winter weather tangles, which contributed to the drop in basis prices.
  • Rain is forecast for Kansas and Oklahoma. This is welcome news that the drought conditions may ease at least temporarily for winter wheat that was planted in the fall and is either breaking dormancy or will very soon.
  • Markets are anticipating the March 31st
  • Prospective Plantings report from the USDA. This report could influence the market’s direction, in part because it will forecast spring wheat plantings.
  • Spring wheat plantings are expected to fall from 2016. Soggy soil could delay planting, which may lead to farmers switching, even more, acres to soybeans or pulse crops.

Facts on Flour: The impact of millfeed.

Have you ever looked in the wall street journal and saw the futures price of wheat falling but the price of flour
remains the same or even rises? Part of the reason can be falling millfeed pricing. When we mill wheat we utilize the
entire wheat kernel, approximately 75% is flour but the remaining portion is sold as animal feed. This animal feed or
millfeed as we call it competes with other feed ingredients such as corn.
If corn prices are low (almost half of all corn grown is used as animal feed) millfeed prices will also be low. That “credit” that we get by selling the millfeed will not be as great thus forcing the price on the flour to go up. Conversely if corn, or other feed ingredients are higher priced we get a better millfeed recovery which offsets more of the price of the wheat thus lowering flour price.


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