The single best time to have sold 2006 harvested wheat was October 16, 2006. The cash price in central Oklahoma and the Texas Panhandle was about $5.23. After adjusting for commercial storage and interest costs, the net price was $5.06.

Mechanical marketing strategies that are tracked each year are: (1) selling wheat on June 20, (2) forward contracting one-half expected production on April 1 and selling the remainder on June 20, (3) storing wheat until October 15, (4) storing wheat until November 15, (5) selling wheat on June 20 and buying a KCBT December call option contract and selling the option on November 15, (6) storing wheat and selling a KCBT December wheat contract (storage hedge) and (7) selling wheat in one-third lots on June 20, October 15 and November 15.

On April 1, 2006, the market analysts were concerned about the drought in Texas, Oklahoma, and much of the hard red winter (HRW) wheat area. Some market analysts were saying, “There is more upside price potential than downside price risk.”

Market analysts were predicting Oklahoma's wheat production to be 95 million bushels compared to a 140 million bushel average and Texas's wheat production to be 45 million bushels compared to an 83 million bushel average. Oklahoma produced 81.6 million bushels and Texas produced 33.6 million bushels.

On April 1, 2006, wheat could be contracted for harvest delivery for $3.79. On June 20, 2006, the cash wheat price was $4.45. Selling at harvest was the best strategy.

At harvest, the USDA was predicting U.S. wheat production to be 1.81 billion bushels compared to a five-year average of 2.05 billion bushels. Foreign wheat production was projected to be 20.2 billion bushels compared to a five-year average of 19.6 billion bushels. Given a projected below average U.S. wheat crop and a projected above average foreign crop, wheat prices were expected to peak in late June or early July.

Wheat prices peaked on July 11 at $4.97, fell to $4.29 by August 17, and then peaked again at $5.23 on October 16. Foreign wheat production was less than expected with Australia's production estimate declining from 881 million bushels in June to 386 million bushels in December.

The best post harvest strategy was to sell wheat on October 16 at $5.23 (net $5.06 after storage and interest). The June 20 price was $4.45.

Selling wheat on November 15 netted $4.72 ($4.88 - $0.16). Selling wheat at harvest and buying KCBT $4.90 December call option contracts netted $4.43 ($4.45 - $0.34 buy premium + $0.032 sell premium). Selling wheat in one-third lots on June 20, October 16 and November 15 netted $4.74 (sold at $4.45, $5.06 net and $4.72 net). The storage hedge produced a net price of $4.42 ($4.72 Nov net price - $0.30 loss on December contract).

In the 1990's, when interest rates were higher, a slight advantage resulted from selling wheat at harvest. Now lower interest rates and changes in the wheat market system may have made selling wheat in October slightly better.

With 20-year average prices, there is no statistical difference between the mechanical marketing strategies except for the storage hedge. The storage hedge produced a lower price than the other strategies.

Using 10-year average prices, There is a statistical difference between selling at harvest and selling in mid-October. The 10-year June 20 average price is $3 compared to $3.16 net for October and $3.13 net for November. Storing and selling in December netted an average price of $2.95.

Few people can predict prices or know someone who can. Mechanical marketing strategies that take advantage of the odds tend to produce the highest net price over time. The problem is identifying the odds and research shows that the odds change over time.