At this writing and within the last week, cash wheat prices have gained about 65 cents. Central Oklahoma and Texas Panhandle cash price are near $6.60. The Kansas City Board of Trade July wheat contract has gained 55 cents, and the local basis is about 10 cents higher.

The major reasons for higher hard red winter wheat prices may be lower projected U.S. spring wheat production, U.S. corn production, foreign wheat production, and lower oil prices. Except for the price of oil, these factors are estimates (guesses) and can and will be changed daily.

While the eastern Corn Belt is experiencing warmer than normal and relatively dry weather, much of the spring wheat area is experiencing too much moisture. Both corn and spring wheat production estimates are being adjusted downward. With tight spring wheat (10 percent lower than last year) and corn stocks (25 percent lower than last year), prices are sensitive to potentially lower production.

Market analysts also have lower wheat production estimates for the European Union, China, and Australia. United States and world wheat 2012-13 ending stocks and the stocks-to-use ratios are projected to be lower in the 2012-13 marketing year compared to 2011-12.

Since May 2, the NYMEX Crude Oil West Texas Intermediate Oil August futures contract price has declined from $106 per barrel to $80. While this drop is negative for corn prices (lower corn demand for ethanol production), tight corn stocks and weather-related lower corn production estimates have more than offset any negative corn price impact.

The National Oceanic and Atmospheric Administration (NOAA) released the 30- and 90-day temperature and precipitation forecast. The 90-day temperature forecast is for above average temperatures over all the U.S. except North Dakota and the northern two-thirds of Minnesota. The 30-day temperature forecast is the same except normal temperatures are projected for the eastern one-fourth of the U.S.

The 30-day forecast projects below average precipitation for Ohio, Illinois, Iowa, and half of Nebraska. The 90-day forecast projects average precipitation for nearly all of the U.S. Below average precipitation is projected for the Washington, Oregon, and Idaho areas.

The forecasts are not good for corn yields but are positive for corn prices. The forecasts should be neutral for spring wheat production.

Producers must remember that the marketing year wheat price trend is normally set in late August and early September. About 40 percent of the 2012 U.S. winter wheat crop has not been harvested, and the spring wheat harvest will not start until mid to late July.

The corn harvest (which should be early this year) normally does not begin until late August. The 2012-13 marketing year wheat supply information contains a lot of unknown factors.

The “joker in the deck” is economic problems in the European Union, China, and maybe the United States. If the EU-27 and/or China go into a recession, it will impact the world economy and demand for U.S. wheat.

A tremendous amount of uncertainty is present in the markets. It may not be the time to sell all of your wheat. But, it may be wise to sell a percentage on this price rally.

Oklahoma and Texas wheat prices could easily decline a dollar over the next few weeks. Or, wheat prices could increase a dollar. It’s a toss of the coin.

Prudent producers often hedge their bets. One way to do this is to spread wheat sells over time by selling on rallies. Selling up to 33 percent in the June/early July time period, one-third in late September/early October and the final third in the November/December has proven to be a good strategy.