Wheat Basis Begins Recovery
While the economic outlook for U.S. agriculture has been bleak in recent years, the challenge has been especially difficult for wheat producers. As evidence of these tough times, U.S. wheat acres, which have trended lower since the early 1980s, tumbled to new lows in 2016 and 2017. Furthermore, Brent previously examined the relationship between wheat and corn prices and found current wheat prices are historically low.
One of the most evident challenges wheat producers have faced in recent years has been a historically large gap between future prices – the price traded on the board of trade – and local cash prices. This difference –known as ‘basis’ – has been historically wide and creates challenges for producers’ marketing plans. This week’s post considers wheat basis data at three locations to look at the current situation as well as historical conditions. (more…)