by Kim Anderson, Oklahoma State University Professor and Extension Economist
Hard red winter wheat producers who have lost their wheat crop to drought are in a dilemma. Wheat prices are relatively high as are the prices for summer crops. It is too dry to plant a summer crop and rain is uncertain. Most farmers are fallowing the wheat land and will plant a 2012 wheat crop next fall. Their number one question is: "What will the wheat price be in June 2012?
The KCBT July 2012 wheat contract price is about $9.25 compared to the July 2011 July wheat contact price of $8.91. Wheat 2011/12 marketing year ending stocks are projected to be 650 mb compared to 850 mb for 2010/11. The five-year wheat average is 650 mb. Corn ending stocks are projected to be 675mb and are projected to remain about the same for 2011/12. With wheat and corn stocks expected to remain relatively tight, June 2012 wheat prices are expected to be at or slightly above current levels.
The 2011 Oklahoma wheat crop is estimated to be about 70 million bushels. The 2009 wheat crop may be used for yield and percent acres harvested estimates. For 2009, 5.7 million acres (ma) were planted, 3.5 ma were harvested, 61% of the planted acres were harvested, and the average yield was 22 bushels per acre. Using the 61% percent harvested acres and the 22 bushels per acre yield, 2011 Oklahoma wheat production will be about 70 million bushels (mb). Using the five-year average percent harvested acres (69%), the average yield (31 bushels) and $8 wheat, the net loss to producers would be about $328 million (111 mb * 8 = $888 million minus 70 mb * $8 = $560 million).
Drought conditions continue in major portions of the hard red winter wheat area. Flooding and rain continues in the northern spring wheat area and parts of the soft red winter wheat area. China and parts of the European Union are experiencing dry conditions, and Canada has too much moisture to plant spring wheat. Possibly, the 2011/12 wheat marketing year price trend could follow the 2010/11 pattern. Except, rather than starting at $3.50, the price may start at $8. Additional production problems with foreign wheat crops could result in this scenario.