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World wheat production and stocks may more than offset the decline in U.S. hard red winter wheat production.

Kim Anderson

May 25, 2023

3 Min Read
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Nearly everyone is writing and talking about how bad the 2023 U.S. hard red winter (HRW) wheat crop is. “The worst Kansas crop since 1963” and “Worst crop in 50 years” will catch your attention. I agree. But the 2023 U.S. HRW wheat crop may not be the important story. 

The important story may be the potential 2023/24 marketing year and 2024 wheat harvest prices. Buried in the news is USDA’s 2023/24 average wheat price estimate of $8. The 2023 wheat harvest price at Medford, Okla., is $8.60. The Perryton, Texas, harvest price is $8.75, and the Snyder, Okla. harvest price is $8.30. These prices are $1.60 higher than they were two weeks ago, and that fact may be newsworthy. 

The average daily 2022 wheat price for the month of June at Medford, Okla., was $10.78. The odds are slim that the average June 2023 wheat price will be near $10. 

Since July 1, 2022, Medford, Okla., wheat prices have averaged $8.49. The price range was between $7.37 and $9.84. 

In my opinion, Oklahoma and Texas wheat prices are expected to remain near the same trading range as observed during the 2022/23 wheat marketing year.  

Yes, Kansas and Oklahoma wheat production is the worst in 30 plus years. This year’s Texas wheat production (56 million bushels (Mb)) is projected to be significantly higher than the 2022 crop (39 Mb). Both 2022 and 2023 Texas wheat production fall below the 10-year average Texas wheat production of 76 Mb. 

The 10-year average U.S. HRW crop is 733 Mb. 2022 U.S. HRW wheat production was 531 Mb and 2023 HRW wheat production is projected to be 514 Mb. U.S. HRW wheat ending stocks, for the 2022/23 wheat marketing year, are projected to be 269 Mb compared to a 432 Mb 10-year average. Some analysts expect 2023/24 HRW ending stocks to be only slightly lower than 2022 HRW wheat ending stocks. 

World wheat ending stocks for the 2023/24 world wheat ending stocks are projected to be 9.713 Bb. Nearly the same as 2022/23 wheat marketing year’s 9.784 billion bushels (Bb). Both 2023/24 world wheat production and ending stocks are projected to be unchanged from 2022/23 production and ending stocks.  

A factor that is easily overlooked is the price spread between U.S. HRW and SRW (soft red winter) wheat. The Chicago HRW wheat futures contract price for the July contract is $2.46 higher than the SRW July wheat future contract price. Normally, the HRW and SRW wheat prices are within 50 to 60 cents of each other.  

Hard red spring wheat prices are normally higher than HRW wheat prices. Currently, the HRW price is 30 cents higher than the HRS price. 

In the May WASDE report, the USDA estimate for the average U.S. wheat price is $8. Current price relationships imply that the average annual U.S.  HRW wheat price will be above the $8 estimate. 

The bottom line is that even though Kansas, Oklahoma and Texas wheat production estimates are extremely low, U.S. HRW wheat prices are not expected to be much higher than during the 2022/23 marketing year. 

The major reason prices are not expected to be higher may be that Russia’s 2023/24 wheat production and stocks which are projected to be 400 Mb above average. 

The last point is that the Chicago HRW July ’24 wheat contract is 85 cents less than the HRW July ’23 contract price. 

The most important news may not be the reduction in U.S. HRW wheat production. The important news may be that world wheat production and stocks may more than offset the decline in U.S. HRW wheat production.  

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