ENID, Okla. —
It appears that wheat prices may have found their lowest level for the current market year.
Prices recently have increased about 30 cents per bushel. Presently, both the Kansas City March and July wheat contracts have price support around $6.15 per bushel. However, there always is the possibility of lower prices even though at the present time this appears to be unlikely. The two major price factors that are affecting hard red winter wheat prices (KC wheat contracts) are sufficient world wheat supplies and wheat quality.
There is more than an adequate supply of wheat in the world to meet the current needs. Analysts are predicting India will start harvesting another record or near-record wheat crop and that it will aggressively export its excess supply. Current world wheat ending stocks are projected to be 6.8 billion bushels compared to a five-year average of 7.1 billion bushels and 6.5 billion bushels last marketing year. Some analysts also contend U.S. hard red winter wheat has an export advantage due to higher quality. Stock levels are a negative and quality is positive from a price perspective.
Market analysts still are discussing USDA’s Oklahoma and Kansas wheat seedings estimate. Some believe Oklahoma and Kansas acres planted to wheat are close to the number of acres planted last year. Others believe this number is lower than last year. However, it appears the market has determined an equilibrium wheat price with little regard to the number of planted wheat acres or wheat stock levels.
New market information will determine if wheat prices break either the support or the resistance levels. If the wheat price goes below the support price level, the next price target will be $6 and then about $5.75 per bushel. Prices above the support levels imply a price target of about $6.50 per bushel.
If you have wheat in the bin and are going to sell it in the near future, consider setting a target sale date to have the wheat sold and then stagger the sales between now and the date you have set to have it all sold. As stated earlier, it is not likely prices will move much in either direction. An unexpected increase in exports is the only thing that would cause a significant price move and that is unlikely.
The June 2014 wheat harvest price is projected to be $6 per bushel. A large wheat crop could result in significantly lower prices. If you can’t afford to sell wheat for $5.25 or less, consider forward contracting 20 percent of your expected production.
Hobbs is Oklahoma Cooperative Extension Service assistant extension specialist for Garfield County.