Every time you think that a nail is about to be put in the wheat price coffin, it bounces back from death. The market refuses to take the chance that wheat will not be available to feed the world. At this writing, the market chatter is about reduced world winter wheat production.

Drought conditions are still prevalent in Texas, Oklahoma, and southern and western Kansas. Above average moisture and/or timely rains will be needed to produce an average wheat crop in these areas.

Favorable cattle and hay prices and anticipated lower wheat prices are expected to result in increased grazing and haying of wheat acres. The result would be lower harvested acres and reduced wheat production.

U.S. winter wheat planted acres are projected to be 3 percent higher than last year. Hard red winter (HRW) wheat planted acres are projected to be up 6 percent. Soft red winter wheat planted acres are projected to be down 2 percent from last year. Increased HRW planted acres are expected to overcome any loss in production in Texas, Oklahoma, and Kansas.

Aggressive Russian and Ukrainian wheat export sales have resulted in a potential export tax on wheat exports, which may limit Russian and Ukraine exports in the April-May-June time period and result in higher world wheat prices. The Russian and Ukraine wheat harvests begin in June.

Some analysts estimate that only 80 percent of the Ukraine’s wheat was planted and/or germinated. Extreme cold conditions in Eastern Europe, Ukraine, and Russia may also reduce 2012 winter wheat production in these areas. Ukrainian production is projected to be 65 percent of last year’s production.

Markets also chatter about dry conditions in northern China, possibly reducing China’s 2012 wheat production. Analysts speculate that China may import wheat during the 2012/13 marketing year.

News out of Australia – excess feed wheat, the increasing value of the Australian dollar and floods in New South Wells restricting wheat shipments – may also be having a positive price impact on U.S. wheat.

At this writing, the Kansas City Board of Trade March wheat contract price has increased $0.75 cents to $7.25. The KCBT July wheat contract price is $0.13 higher at $7.38. By contrast, the Chicago Board of Trade March wheat contract price is $0.50 lower than the KCBT March contract price at $6.75.

Some analysts, myself included, marvel at the recent wheat price increase. Reuters reported a poll of 11 grain analysts related to the CBT wheat contract price on Dec. 31, 2012, compared to the price on Dec 31, 2011. Dropping the high and low estimates, the average CBT Dec. 31, 2012, projected price was $5.97 compared to $6.53 on Dec. 31, 2011. The low price estimate was $5.28, and the high price was $6.90.

At this writing, the CBT Dec. 2012 wheat contract is $7.26 and the KCBT Dec., 2012 wheat contract price is $7.66. If the average of the analysts’ guesses is correct, the CBT Dec., 2012 wheat contract price will decline $1.29.

Assuming a $1.29 decline and a $0.40 spread between CBT and KCBT wheat contact prices, the KCBT Dec. contract price implies a November, 2012 KCBT Dec. wheat contract price of $6.37. Assuming a November, 2012 wheat basis of minus $0.35 in central Oklahoma and minus $0.55 in the panhandle regions, Oklahoma/Texas wheat price are projected to be in the $5.80 to $6.05 range.

The wheat market wants to be bullish. There are enough potential world winter wheat production problems to support the bullish attitude. However, we all know that you do not know production until the truck is parked on the elevator scales.

Maybe you should take advantage of this optimism.