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Could 2021 harvest prices be higher? Could wheat prices be lower?

Kim Anderson

March 18, 2021

2 Min Read

On Feb. 24 in Medford, Okla., wheat could be forward contracted for harvest delivery for $6.51. At this writing, wheat may be forward contracted for about $6. Compared to the mid-March 2020 wheat for forward contract price of $4.25, $6 is a relatively good price for June/July 2021 delivered wheat. 

Could 2021 harvest wheat prices be higher? You bet they could. Could wheat prices be lower? Yes, but given that the U.S. hard red winter (HRW) wheat crop is the next exportable world wheat to be harvested, significantly lower prices, $1 or more, have relatively low odds. 

Events that may result in $7 wheat include below-average Oklahoma, Texas, and Kansas wheat production; a decline in wheat production wheat expectations for Russia/Ukraine; and/or world wheat production lower than projected. 

As the U.S. HRW wheat crop comes out of dormancy, the market is looking for signs of freeze damage. Wheat is resilient and given adequate precipitation and relatively low temperatures, it can recover from freeze damage. 

At this writing, the 90-day weather forecast for the HRW area is for above-average temperatures for most of the area south of the North Dakota southern border. The farther south, the higher the probability of above-average temperatures. 

For an area specified by a line north to south along the eastern borders of Texas, Oklahoma, Kansas, and Nebraska to the Pacific Ocean with the top of the area being along the Nebraska/South Dakota border, the 90-day forecast is for below-average precipitation. Above-average temperatures and below-average precipitation increase the odds of below-average yields. 

Also increasing the odds of below-average yields are the drought conditions in the Texas Panhandle up through western and the northern half of Kansas, north up into Canada and west to the Pacific Ocean. Only half of the Oklahoma Panhandle and a small portion of western Oklahoma are in drought conditions (Figure 1). These unfavorable forecasts cover most of the HRW and hard red spring wheat areas.  


Russian 2021 wheat production is projected to be 2.7 billion bushels compared to 3.1 billion bushels in 2020. Production of 2.7 billion bushels or less would be positive for wheat prices.  

It is my belief that Russia has a tendency to underestimate wheat production and the amount of wheat available for export. On May 15, 2020, Russian wheat production was projected to be 2.83 billion bushels. In the March 2021 WASDE report, 2020 Russian wheat production was estimated to be 3.13 billion bushels. 

A negative for wheat prices is the International Grain Council’s 2021/22 projected 29- billion-bushel record world wheat crop compared to IGC’s 2020/21 record world wheat production estimate of 28.4 billion bushels. Also negative for prices is projected record world 2020/21 wheat ending stocks. Ending stocks for the major exporters (Argentina, Australia, Canada, Kazakhstan, Russia, Ukraine and the United States) are projected to be equal to the five-year average. A fact is that the world’s wheat supply is more than adequate.  

Higher U.S. wheat prices during the wheat harvest and lower prices throughout the marketing year are consistent with USDA’s 2021/22 projected average annual wheat price of $5.50. If wheat prices are above $5.50 ($6) during wheat harvest, to average $5.50 for the marketing year, prices must go below $5.50 later in the marketing year. 

The current market situation supports $6 wheat during the 2021 Oklahoma/Texas wheat harvest. The world wheat situation may support wheat prices below $5.50, which makes a $6 forward contract a relatively good price. 

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