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Drought conditions affecting wheat prices, even with late-season snow

A late season wintry blast that hit much of Oklahoma on March 27 was not enough to drive thoughts about the effect drought may have on wheat prices from the minds of some state producers.

It took from March 3 to March 20 for the Kansas City Board of Trade May wheat contract price to increase from $5.41 to $6.12. In two days, the price then fell to $5.55, a loss of 57 cents.

“The difference was intensifying drought conditions during the first 20 days and moisture and forecasted moisture over much of the hard red winter wheat belt during the last few days,” said Kim Anderson, Oklahoma State University Cooperative Extension grain marketing specialist.

If 2009 hard red winter wheat production is average or better, Anderson expects prices to remain relatively low.

Reports indicate that wheat is in relatively good condition in north central Oklahoma and central Kansas, and has the potential to provide above-average yields. The same does not hold true for wheat south of Interstate 40 and west of Highway 183 in Oklahoma, north into western Kansas, the Texas Panhandle and Colorado.

“At best, wheat in these areas has the potential to produce average yields,” Anderson said. “Odds are that the hard red winter wheat yield will be below average.”

Acres planted with hard red winter wheat are projected to be 30.2 million, compared to 32.5 million acres last year. The 5-year average is 31.1 million acres.

“The percentage of acres planted with hard red winter wheat that are harvested will probably be about average,” Anderson said.

The Kansas City Board of Trade May wheat contract price has support at $5.40, although Tuesday, March 31, and Wednesday, April 1, will be key days.

“May contract prices below $5.40 will signal that the next target price is about $5.10,” Anderson said. “Equivalent prices for the July wheat contract are $5.60 and $5.20.”

TAGS: Corn
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