Chicago wheat futures have been climbing for the past few weeks based on still somewhat speculative supply losses due to adverse weather conditions and solid demand. Futures literally look forward while USDA’s strength is in the present and past. Historically, the stocks to use ratio and season average price correlate very closely (0.943). However, the recent move higher in wheat prices has reduced correlation by 1.8 percent, at least relative to USDA’s season average projection. We will not have USDA’s final assessment of this year’s wheat production until early 2020, and the agency will continue to make adjustments in its supply/demand balance and consequent pricing outcomes for well more than a year from no...
From WPI Consulting
Communicating importance of value-added products
Facing increasing pressure to quantify the value of export promotion efforts to investors, a U.S. industry organization retained WPI to develop a quantitative model that better communicated the importance of exports. The resulting model concluded that value-added meat exports contributed $0.45 cents per bushel to the price of corn, increasing support for that sector’s financial support of WPI’s client. In addition to serving the red meat industry with this type of analysis, WPI has generated similar deliverables for the U.S. soybean and poultry/egg industries.