You would think that a cash wheat price of $5.45 would make wheat marketing decisions easy. The $5.45 price is up from $5.29 yesterday, down from $5.60 three days ago and up from $4.65 nine business days ago. The day of this writing, the range between the high price and low price was 27 cents.

Wheat and grain stocks are tight and tight stocks result in high and volatile prices. Volatile wheat prices are partially caused by fear and fear is contagious. Decisions based on fear appear to have a high probability of being wrong.

Buyers may be afraid there will not be enough wheat and that they need to buy early. At the same time, producers may be afraid prices will continue to increase and they store wheat. Prices fall and buyers leave the market and sellers become afraid that prices will continue to fall and they drive prices lower by selling.

Another factor that results in volatile prices is uncertain information. For example, ripe wheat, rain and wet fields may result in lower yields and quality. Currently, everyone knows that yields and quality are declining. No one knows how much, so they make educated guesses. Guesses lead to uncertainty, uncertainty to fear and fear to questionable decisions.

It is important to review information that is known. Then known information may be used to set the foundation for prices. We know that 2006/07 U.S. wheat ending stocks were 443 million bushels compared to 417 million bushels in 2005/06 and that the five-year average was 510 million bushels. The estimate for 2007/08 marketing year ending stock is 443 million bushels. The odds are that this estimate will be lowered.

World wheat ending stocks for 2007/08 were estimated to be 4.1 billion bushels compared to 4.5 billion bushels in 2006/07 and a five-year average of 5.3 billion bushels. The world's wheat stocks to use ratio (ending stocks divided by use) is estimated to be 18 percent. This is a record low.

Also known is that U.S. corn producers planted over 90 million acres of corn. Seventy percent of the corn is rated good to excellent. Corn production is in line with the 12.5 billion bushels that are needed to meet 2007/08 marketing year demand.

Drought conditions have reduced wheat production expectations in Russia and Ukraine. Parts of Argentina are experiencing dry planting conditions. Canadian producers planted less wheat than last year.

Based on the above known information and the fact that Oklahoma and Kansas wheat production is going to be less than earlier expected, the KCBT July wheat contract price went from $4.80 to $6. Cash prices went from $4.40 to $5.60.

By the time this article is printed, the market will be using the KCBT September contract price to determine cash prices. At this writing, the KCBT September contract price is $5.98 and the December contract price is $6.09.

If wheat yields and quality are better than expected, the September contract price may fall to $5.30 and cash price to about $4.90. If yields and quality are as expected the September contract price is expected to establish a sideways pattern between $5.80 and $6.20. Cash prices should remain about 40 cents less than the futures contract price.

Marketing is rarely, if ever, easy. That is unless you have a written marketing plan and the discipline to follow it.

In volatile markets it is often psychologically wise to stagger sales over time. Set a date that you want to have all the wheat sold. Then determine three or four dates to sell wheat. Mechanically sell wheat on the set dates.

An alternative plan is to set target prices and kill dates. For example, the current price is $5.45. Sell one-fifth of the wheat today and sell another one-fifth of the wheat if prices reach $5.75 or July 20, whichever happens first. Set prices and dates until all the wheat is sold.