At this writing, Oklahoma and Texas Panhandle wheat prices are between $4.50 and $4.80. Given that the 2008-2009 wheat marketing year supply and demand is basically determined, outside market factors (value of the dollar, world financial situation, and progress of the 2009 wheat crop) will determine future wheat price movements. There is little reason to be optimistic.

Wheat harvests have started in both Argentina and Australia. Australia’s wheat harvest normally runs between late October and late December. The Argentine wheat harvest normally runs between mid-November and mid-January. Wheat is also being harvested in South Africa.

Argentina normally produces about 2 percent, Australia about 4 percent, and South Africa, normally 1 percent of the world’s wheat. This implies that less than 7 percent of the 2008-2009 wheat marketing year wheat has not been harvested.

This also implies that of the world’s projected 25 billion bushel wheat crop, 23.3 billion bushels have already been harvested. Without a single bushel being produced by Argentina, Australia or South Africa, a record world wheat crop has already been harvested and is available for consumption.

World wheat consumption for the last three marketing years has been 22.9, 22.7, and 22.7 billion bushels. Unless world wheat use is higher than during the last three years, world wheat stocks will increase. The USDA projects 2008-2009 marketing year wheat use to be 24.1 billion bushels. World wheat ending stocks are projected to increase about 900 million bushels.

In the USDA October supply and demand report, Argentine wheat production was projected to be 441 million bushels compared to a five-year average of 560 million bushels. Australian wheat production was projected to be 790 million bushels, compared to a five-year average of 718 million bushels.

Australia’s record production is 960 million bushels in 2005-2006. In 2006-2007, Australian wheat production was 398 million bushels.

The above information implies that unless something happens to destroy the 2009 winter wheat crops, the odds of $6 wheat are low.

Current market prices are below the variable (seed, fertilizer, fuel, etc.) cost of production for the 2009 U.S winter wheat crop. This is a market signal that the world has a surplus of wheat and that wheat production must decline.

It is also a signal that buyers can buy sufficient amounts of wheat to meet current needs at current prices.

The good news is that buyers do not appear to be buying ahead. The bad news is that the 2008 winter wheat crop was above average and producers still own a lot of wheat.

During the last two weeks, The Kansas City Board of Trade (KCBT) March wheat contract has traded between $5.43 and $6.23. The March wheat contract closes were between $5.47 and $6.09. Within the next few weeks, the market will roll from the KCBT December contract to the KCBT March contract.

For wheat price to trade out of the current 60 cents price range, the KCBT March wheat contract price must close above $6.25 for two consecutive days or close below $5.50 for two consecutive days.

Producers with wheat to sell should forget about predicting prices. Producers should consider using mechanical marketing strategies.

One strategy is to set a date to have all the wheat sold and to sell a specified percentage each week, every other week or each month between now and the specified date.

A key to selling wheat is to have a plan that takes the emotion out of the decision.