by Kim Anderson, Oklahoma State University
The USDA released the December WASDE reports and the market just yawned. USDA's estimates were near the market expectations. Key components of the report are that U.S. and world wheat stocks are above average. Corn, soybean and cotton stocks are well below average. Market analysts estimate that 2011 corn planted acres need to be 4 to 6 million acres higher than last year's 88 million acres. The majority of the acres are expected to come from soybeans. Spring wheat and cotton are expected to lose some acres.
Kansas City Board of Trade March wheat contract prices remain above the $7 to $8 sideways price pattern that was established July 30. The March contract price has been above the previous $8.435 contract high price but has failed to close above $8.44. It will take two closes above $8.44 to continue the uptrend. With the July contract it will take two closes above $8.50. The next resistance is about $9. There is price support at about $8.
Oklahoma new crop (2011 wheat) bids are the KCBT July wheat contract price minus between $1.10 and $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 $8.40, central Oklahoma new crop wheat bids are around $7.40 ($8.40 - $1) and the Texas panhandle's new crop wheat price is about $7.05 ($8.40 - $1.35).
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.
Watch Anderson's Market Commendary video, courtesy of SUNUP TV