The USDA released new grain supply and demand estimates at the February Outlook Conference. There were minor changed from the USDA Long-term (10-year) estimates that had been released a few weeks earlier.

Planted acres for 2011 remained at 57 million. Expected abandonment of hard red winter wheat acres may result in harvested acres being about the same as last year. Wheat yields are expected to average 43.8 bushels per acre.

Wheat production is projected to be 2.08 billion bushels compared to 2.21 billion bushels in 2010. The five-year average is 2.16 billion bushels.

Ending stocks for 2011/12 were projected to be 663 million bushels compared to a projected 818 million bushels this year and a five-year average of 642 million bushels.

The USDA projects the 2011/12 marketing-year average price to be $7.50. The five-year average U.S. wheat price is $5.62.  During the last five years, the range of the average annual prices has been from $4.26 to $6.78.

Since June 1, 2006, the daily cash price range in Oklahoma and the Texas Panhandle was between $3 on June 9, 2010 and $12.65 on March 12, 2008. The June 1, 2006 wheat price was $4.50.

For an example of wheat price volatility, consider prices during the 2010/11 wheat marketing year. The 2010/11 wheat marketing year U.S. average price is projected to be $5.70. The low price for Oklahoma and Texas was $3 at harvest and the high price was $8.96 on February 14. At this writing, cash wheat prices are about $8.10.

While the expected June, 2011 wheat price in Oklahoma and Texas is $7, with good weather and relatively high yields, wheat prices could be below $5.50. With hot, windy weather between now and harvest, wheat prices could be above $10. The weather is and always will be the key to prices.

There is concern that drought conditions exist in most of the hard red winter wheat area and the southern two-thirds of the soft red winter wheat area. Recent and projected rains may reduce drought conditions in much of the soft red winter wheat area.