If the Kansas City Board of Trade December wheat contract price is below $3.50, then wheat prices probably will not higher. If the KCBT Dec contract price is above $3.50, then wheat prices have a chance to increase another 20 cents.

A market factor supporting wheat prices are exports and factors restricting prices from increasing are producer owned wheat, the foreign wheat supply, and U.S. corn prices.

An interesting note is that 2004/05 marketing year wheat production (2.164 billion bushels) is 181 million bushels less than production in 2003/04 (2.345 b.b.). The USDA projects that 2004/04 wheat exports will be 184 million bushels less than 2003/04 wheat exports.

To export USDA's projected 975 million bushels during the 2004/05 wheat-marketing year, weekly shipments must average 18.8 million bushels. To date, weekly shipments have averaged about 20.4 million bushels. For the remainder of the marketing year, weekly shipments must average 17.6 million bushels.

The USDA predicts that 2004/05-wheat marketing year hard red winter wheat exports will be 355 million bushels compared to 512 million bushels last year. To meet the USDA 355 million bushel export projection, weekly HRW wheat exports must average about 6.8 million bushels.

To date, 212 million bushels of HRW wheat have been sold and 154 million bushels have been shipped. Weekly shipments have averaged about 7 million bushels. To meet USDA's projected 355 million bushel export, weekly HRW shipments must average about 6.7 million bushels.

United States wheat exports have been sufficient to meet USDA projections. However, exports are not expected to reduce wheat-ending stocks relative to last year's 547 million bushels. Wheat ending stocks for the 2004/05 marketing year are projected to be 569 million bushels.

Reports indicate that producers are storing a higher percentage of the 2004/05 HRW wheat production than normal. This unsold wheat helps keep wheat prices from increasing and when the wheat is sold, prices will probably fall.

Wheat harvests have started in Argentina and Australia. The harvests are in the early stages and yields and quality are as expected. Argentina's wheat crop received needed rain in October, which helped make that crop.

The USDA projects Argentina wheat production to be 532 million bushels compared to 496 million bushels last year and a 5-year average of 543 million bushels.

Australia is projected to produce 863 million bushels compared to 916 million bushels last year and a 5-year average of 781 million bushels. Early harvest yields indicate that this estimate will be relatively close.

Reports indicate that U.S. winter wheat planted acres will be equal to or slightly higher than last year. Recent rain in soft red winter wheat areas increased the odds of a good SRW wheat crop.

Producers in the hard red winter wheat area have nearly completed planting and most of the wheat has emerged in good condition. A few areas were too dry to plant and then too wet to plant. Overall, the 2005 U.S. winter wheat crop is expected to be as large or larger than 2004 production.

The 11.6 billion bushel corn crop is for real. For nearly two months, the Chicago Board of Trade December corn contract traded between $2 and $2.10. The CBT Dec contract price went below $2 this week. Relatively low corn prices put a damper on higher wheat prices.

For the KCBT December wheat contract price to stay above $3.50 and maybe break $3.70, Argentina or Australia's wheat crops need to be less than expected. This is not very likely.

Consider selling wheat on price rallies.