by Kim Anderson, Oklahoma State University
The week of Dec. 13 was relatively calm. The KCBT March contract price declined from $8.32 to $8.05 on light volume. Market news included potential drying in eastern Australia, slightly higher production estimates for Argentina and relatively good export sales. Most market analysts do not expect much price action until after Jan. 1.
Kansas City Board of Trade March wheat contract prices remained above the $8 support price. If the March contract price closes below the $8 support, the next price support (minor) is about $7.50. There is major price support at $7.
United States' wheat ending stocks are projected to be 858 million bushels (mb) compared to a 5-year average of 596 mb. World wheat ending stocks are projected to be 6.5 billion bushels (bb) compared to a 5-year average of 5.6 bb. The 5-year average June Oklahoma wheat price is $5.50. With an average or higher U.S. winter wheat crop, June 2011 Oklahoma wheat prices should average around $5.50 per bushel. This implies an average June 2011 KCBT July wheat contract price of about $6.60. A relatively large wheat crop could result in Oklahoma cash prices being in the $4.50 range.
Oklahoma new crop (2011 wheat) bids are the KCBT July wheat contract price minus between $1.10 and minus $0.90. The Texas panhandle new crop basis is between and minus $1.45 and a minus $1.25. With the KCBT July '11 wheat contract price at about $8., central Oklahoma new crop wheat bids are around $7 ($8 - $1) and the Texas panhandle's new crop wheat price is about $7.05 ($8.40 - $1.35). For these prices to hold, the drought area in the hard red winter wheat region must get worse.