Even if wheat prices recover from current levels, they are not expected to reach the 2004 harvest price level of $3.50. On June 20, 2004, central Oklahoma and Texas Panhandle wheat prices were about $3.50 per bushel. At this writing, cash wheat prices are about $3.15 and the KCBT March contract price is $3.25.

After June 20, wheat prices fell to $3.01 (Aug. 11), wallowed around until mid-September and then rallied about 45 cents to $3.46 (Sept 21). Since late September, wheat prices have traded between $3.20 and $3.40 per bushel. Since Thanksgiving, wheat prices have fallen 28 cents.

The market is using the KCBT March contract to determine the cash price. Critical price levels are $3, $3.20 and $3.40. With the current KCBT March contract price near $3.20, it will take two consecutive closes below $3.20 to signal that March contract price will fall to $3.

If the KCBT March contract closes two consecutive days above $3.40, the next target price is $3.60.

The KCBT March contract price may be adjusted to the local cash price by adding the local basis (the difference between the local cash price and the KCBT March contract price). In central Oklahoma and the Texas panhandle, the local basis is about minus 10 cents. This implies that the local cash price is 10 cents less than the KCBT March contract price ($3.25 - $0.10 = $3.15).

The Argentine and Australian wheat harvest is over 50 percent complete. Argentina’s harvest is slightly higher than expected. Australia’s wheat crop is lower than expected.

World wheat production for the 2004/05 wheat-marketing year is expected to be 22.7 bullion bushels. The odds that there will be a surprise in Argentina or Australia’s wheat production are small.

Between now and mid-April, KCBT March wheat contract prices are not expected go much below $3.20 and may go up to $3.50. This implies that cash wheat prices in central Oklahoma and the Texas panhandle are expected to range between $3.10 and $3.40.

Market factors that may cause wheat prices to increase are problems with the 2005 winter wheat crop, a limited supply of milling quality wheat and normal price increases. After the Argentine and Australian wheat harvest are complete, wheat prices tend to peak about April 1.

United States and world wheat stocks are still tight enough so that the 2005 U.S. winter wheat harvest is important. The market has already factored planted acres and crop condition into the KCBT July ’05 contract price and, to a limited extent, the KCBT March contract price.

The next critical time for the 2005 winter wheat crop is when it comes out of dormancy around March 1. From that time on, the size of the 2005 winter wheat crop will be a major price factor.

Some analysts have indicated that there may be a limited supply of flour milling quality wheat. One indication is that there is a higher percentage of foreign wheat being sold for feed than normal. If the flour milling wheat is limited, then wheat prices may increase more than currently expected.

Producers that have wheat in storage may want to consider setting “sell” prices and dates. Setting both a target price and date to sell wheat does this.

For example, you may set a “sell” price of $3.25 and date of December 20. If the price reached $3.25 before December 20, the wheat is sold. If the price does not reach $3.25 before December 20, the wheat is sold on December 20.

Market signals indicate that wheat prices may increase. However, the price increase may not pay the 4.5 cents per month storage and interest cost to store the wheat. This implies that it is time to sell wheat out of storage.