by Kim Anderson, Oklahoma State University Professor and Extension Economist
Since April 1, the KCBT July wheat contract price has increased about 43 cents. A strong resistance point and potential target price is $5.38. The July contract price has support at about $5. Using a minus 80 cent June basis, the market is offering about $4.36 for harvest delivered wheat. The June 2010 forecasted price for central Oklahoma is $4.50.
There are reports that wheat yields in parts of Texas and southern Oklahoma may be lower than earlier expected. Some Texas wheat is reported to be infested with rust and some areas of Oklahoma's wheat yields may be lower due to dry conditions. Over all, U.S. wheat is estimated to be 69 percent good to excellent. Oklahoma wheat is estimated to be 74 percent good to excellent compared to 12 percent last year.
There are reports that China's wheat production may be less than expected. Below-freezing temperatures are projected for this weekend and yield estimates are being lowered for China's total wheat crop. Still, wheat stocks should remain an albatross on wheat prices. For hard red winter wheat prices to go above $5, U.S. wheat production needs to be less than 1.9 billion bushels. The 2010 wheat production estimates range between 1.95 and 2.0 billion bushels. World wheat production needs to be below 22.5 billion bushels.
Only 6 percent of Oklahoma's wheat is headed compared to 29 percent last year and a 25 percent average. 75 percent of Oklahoma's wheat is jointed compared to a 5 year average of 94 percent. In Kansas 77 percent of the wheat has broken dormancy and 6 percent is jointed compared to 5 percent jointed last year. Given the amount of wheat stocks, a delayed harvest may not have much price impact.
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