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Abnormal weather patterns may salvage wheat price

Mark Hodges (Oklahoma Wheat Commission and agronomist) wrote, “With absolutely no moisture and considering the lack of a significant root system, it is amazing how well the wheat crop looked all winter and early spring. Then, as jointing occurred, there has been an unusually short period to head emergence. Most plants headed are only 12 inches to 14 inches tall. While the final numbers for this year's crop will ultimately be determined by the weather, it is truly amazing the ability this crop has had to compensate for adversity. You wonder how many lives it has?”

This wheat crop also baffles the marketplace. In the August through the early December period, the KCBT July wheat contract price wallowed around in the $3.40 to $3.65 price range. On Dec. 10, the July wheat contract price closed at $3.44. On March 10, the July contract price peaked at $4.62 (up $1.18). By March 28, the contract price had fallen to $4.01 (down 63¢). And by March 31, the contract price increased to $4.27 (up 26 cents). The market cannot decide how much wheat will be produced.

As Hodges said, “…this year's crop will ultimately be determined by the weather…” The only salvation is that weather patterns have not been normal and what is required for wheat production is abnormally cool wet weather. What we do know is wheat stocks and some idea about the range of potential production.

Some analysts predict 2006 Oklahoma wheat production to be 95 million bushels from 5.8 million planted acres. The five-year average production is 140 million bushels on an average of 6.1 million planted acres. In 1996, Oklahoma wheat production was 93.1 million bushels from 7 million bushels planted and 4.9 million harvested acres.

Sixty-five percent of Oklahoma's wheat crop is in poor to very poor condition. Twenty-nine percent is classified as fair and only 9 percent is classified as good to excellent.

The Texas wheat crop is in worse shape than Oklahoma's crop. Seventy-eight percent of the Texas wheat crop is classified poor to very poor and 15 percent is considered fair. Texas's five-year average production is 97.6 million bushels.

Kansas's wheat crop is in worse condition than last year but significantly better than either the Oklahoma or Texas wheat crop. Twenty-nine percent of the Kansas wheat crop is in poor to very poor condition, 45 percent is fair and 25 percent is good to excellent. Kansas's five-year average production is 354 million bushels.

The USDA estimated U.S. wheat planted acres to be 57.1 million compared to 57.2 million acres last year. United States winter wheat plantings were 41.4 million acres compared to 40.4 million acres last year. The big surprise was that spring wheat and durum wheat planted acres are estimated to be 15.7 million acres compared to 16.8 million acres last year.

The International Grains Council predicts that the 2006/07 world wheat production will be 21.6 billion bushels compared to 22.7 billion bushels for the 2005/06 wheat marketing year. Wheat consumption in the 2006/07 wheat marketing year is expected to be slightly less because of higher wheat prices.

Both world and U.S. wheat stocks are expected to decline during the 2006/07 marketing year. Based on the USDA March wheat ending stocks estimate, 2005/06 world wheat ending stocks are projected to be 5.2 billion bushels compared to a five-year average of 6 billion bushels. United States wheat ending stocks are projected to be 542 million bushels compared to a five-year average of 579 million bushels.

In about 55 days, the U.S. winter wheat harvest will be in full swing. At this writing, the market is predicting a mid-June price of about $3.85. Favorable weather could result in a mid-June price of $3.40 and hot, dry weather could result is a mid-June price of $4.40. In about 55 days, we will have a better handle on 2006 wheat harvest prices.

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