Wheat in Argentina was reported to be selling for $634 per metric ton or about $17 per bushel. The high wheat price and cost of bread and flour has resulted in demonstrations and riots. The 2013 Argentine wheat harvest is just beginning and is expected to be below average. Argentina may not export wheat until after January 1.

Australia’s wheat in storage is reported to have relatively low protein. The wheat harvest is just starting, and production is projected to be slightly less than the 931-million bushel average.

Canada harvested a near record wheat crop that was well below average in protein.

While Russian wheat production is projected to be slightly above average, Russian wheat exports are expected to be limited. The Russian government is purchasing wheat to replace stocks that were sold because of 2012’s 30 percent below average wheat production.

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The above situation has resulted in Oklahoma and Texas wheat prices increasing to above late June, 2013 price levels. On June 21, the price in central Oklahoma was about $7.35, and prices in the Texas panhandle were near $7.15. Until recent price increases, Texas Panhandle wheat prices remained in the $6.95 to $7.15 price range.

By July 1, Oklahoma wheat prices had declined to $6.78. Between July 1 and September 25 the Oklahoma cash price ranged between $6.72 and $6.91. Oklahoma wheat prices were above $7 on September 25 and reached $7.50 in late October.

Additional price increases will require less than expected production and/or quality in Argentina and/or Australia. These harvests will not be complete before late December.

In the September World Agricultural Supply and Demand Estimates (WASDE), the USDA projected U.S. hard red winter wheat ending stocks to be 197 million bushels compared to a five year average of 325 million bushels. This will be the lowest HRW wheat ending stocks since 138 million bushels in 2007/08.

In June 2007, the price of wheat in Oklahoma was near $5.50. By October 1, wheat prices had increased to $8.98. By November 12, wheat prices had declined to $7.11. Wheat prices peaked on March 12, 2008, at $12.62. Prices were extremely volatile with $1 per day moves.

The average June 16 through July 15, 2008, Oklahoma wheat prices was about $8.25. The 2008 hard red winter wheat production was 1.035 billion bushels.

The 2007/08 marketing year price movements were the result of extremely tight HRW and U.S. and world wheat stocks. U.S. and world wheat stocks were the tightest in 26 years, which is not the case now.

U.S. wheat stocks are projected to be 561 million bushels compared to a five-year average of 791 million bushels. World wheat stocks are projected to be 6.5 billion bushels (this figure may be lowered to 6.3 billion in the November WASDE) compared to a five-year average of 6.9 billion bushels.  

The 2013/14 marketing year stocks-to-use ratios are projected to be 20.8 percent for HRW wheat, 25 percent for world wheat, and 23.3 percent for U.S. wheat. The 2007/08 marketing year stocks-to-use ratios were 14 percent for HRW, 20.4 percent for world, and 13.2 percent for U.S. wheat. Current stocks-to-use ratios are not nearly as low as they were during the 2007/08 marketing year.

Argentina’s $17 wheat prices have been factored into the market. Unless Argentina’s and/or Australia’s wheat productions are significantly less than expected and/or U.S. 2014 winter wheat production expectations are well below average, wheat prices are not expected to increase more than another 50 to 60 cents per bushel. A 35 percent probability exists that wheat prices have peaked.

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