Since April 24, Oklahoma and Texas wheat prices have increased $1 per bushel. This may not be the time to get greedy; this price rally may not last that long.

The price increase is mostly due to a projected 21 percent decrease in 2017 U.S. wheat production and recent declines in expected U.S. hard spring wheat production. Even with lower U.S. production, 2107/18 wheat marketing year ending stocks are projected to be 924 million bushels, compared to a five year average of 840 million bushels.

Hard red winter wheat production is projected to be 743 million bushels, compared to 1.08 billion bushels last year and a five year average of 880 million bushels.

Oklahoma wheat production is projected to be 89.1 million bushels, compared to 135 million last year and a five year average of 109 million bushels. Texas wheat production is projected to be 69 million bushels, compared to 90 million last year and a five year average of 85.4 million bushels.

Some reports indicate that Oklahoma and Texas 2017 test weights may average near 60 pounds per bushel. Protein may average less than 11 percent. Export contracts often require minimum 12 percent protein.

 LESS SPRING WHEAT

Prices started the uptrend when crop condition reports indicated problems with 2017 U.S. hard spring wheat production. A June USDA report projected spring wheat production at 493 million bushels, compared to 568 million last year and a five year average of 523 million bushels.

Related:Northeast Texas wheat crop disappointing; summer crops are promising

Hard red spring wheat is relatively high protein (14 percent to 16 percent) and may be used to blend with lower protein wheat. Lower yields may result in relatively high HRS wheat protein levels.

A problem is that lower U.S. wheat production is offset by relatively high world wheat production. World wheat production is projected to be 27.2 billion bushels, compared to 27.7 billion last year (2016/17 marketing year). The reduction in U.S. wheat production makes up 490 million bushels of the 540 reduction in world production.

Major hard wheat exporters include Argentina, Australia, Canada, Kazakhstan, Russia, and Ukraine.

Australian production is projected to be down 29 percent (920 million bushels — the five year average is 960 million bushels), Canada production down 11 percent (1.04 billion bushels — 1.13 billion bushel average), Kazakhstan down 13 percent (480 million bushels — 480 million bushel average), Russia (11 percent lower (2.54 billion bushels — 2.08 billion bushel average), and Ukraine down 7 percent (920 million bushels — 860 million bushel average).

Of the hard winter wheat exporters, only Argentina is projected to have higher production (+3 percent, 640 million bushels compared to a 460 million bushel average).

 EXCESS STOCKS

Lower production in hard wheat exporting countries could support relatively higher prices. A problem is that excess wheat stocks more than offset lower production.

The 2017 U.S. hard red winter wheat crop is essentially known. Argentina and Australia’s wheat crops will be harvested mostly in November and December. Canada, Kazakhstan, Russia, and Ukraine will harvest July through October.

The marketing year price trend is normally established from late-August through October. This year may be no different.

It should also be pointed out that the total U.S. wheat crop is only about 6.7 percent of world wheat production. U.S. hard wheat production is only 16 percent of the world’s hard wheat production.

Wheat prices have increased from about $3 to about $4. If foreign wheat production is less than expected, wheat prices could increase another $2. However, it might not be wise to hold out for higher prices.

It may be wise to sell some wheat now and save some wheat to sell at a later date. Don’t get greedy.