The market determines prices based on expected supply and demand. These expectations continuously change, so prices are in constant motion (moving up or down). Market participants tend to ask two questions: “What is the current price?” and “How low or high will prices go?” 

At this writing, cash wheat prices are $6.17 (-$0.60 KEZ (Dec Wheat Futures Contract)) in Pond Creek, Okla., $5.92 in Perryton, Texas, (-$0.85 KEZ), and $5.82 (-$0.90 KEZ) in Snyder, Okla.  

The expected 2024 average harvest price in Pond Creek is $6.22 (forward contract price) with potential prices ranging from a low of $5.33 to a high of $9.95. Perryton prices are expected to be $0.15 higher than Pond Creek, and Snyder prices are expected to be $0.25 lower than Pond Creek. 

Historical prices may be used to project the high and low prices (Figure 1). During the period June 2009 through September 2023, the highest price was $13.13, and the lowest price was $2.55. 

This means the price range during the 2009 harvest through the 2023 harvest was $10.58 ($13.13 - $2.55). The average price was $5.84. It’s interesting to note that the current wheat price is $0.38 above the average price for this 14-year period. 

This price range may be used to set the upper and lower limits for wheat prices. The lower limit is $2.55 the upper limit is $13.13.  

Related:COTTON SPIN: 2024 cotton crop outlook

So, what’s the potential low and high prices for the 2024 Oklahoma and Texas wheat harvest? Research shows that the best price predictor is the current price. At this writing, wheat may be forward contracted for harvest delivery in Pond Creek at $6.22 (KEN24 - $0.70 with N24 standing for July 2024 Futures), $6.37 (KEN24 -$0.55) for Perryton, and $5.97 (KEN24 - $0.85) for Snyder. 

 The data (June 2029 through August 2023) also shows that the average difference between average annual harvest (June through August) prices was $1.26. The largest price changes between harvest were $2.50 up and $2.12 down.  

Pond Creek’s average 2023 June through August price was $7.45. Using the average price change between harvest, the lowest expected price for the 2024 harvest would be $6.19 ($7.45 – $1.26). The current forward contract price is $6.22. Using the largest lower price change, the lowest expected 2024 harvest price would be $5.33 ($7.45 – $2.12).  

Using the average price change ($1.26), the highest expected 2024 average harvest price is $9.01 ($7.45 + $1.26). Using the largest higher price change, the highest expected 2024 harvest price would be $9.95 ($7.45 + $2.50). 

Related:Despite weather challenges, May, Sept. redeem crops

To summarize, the expected 2024 average harvest price in Pond Creek is $6.22 (forward contract price) with a potential price range of $5.33 to $9.95. 

The current wheat supply and demand situation supports above-average 2024 wheat harvest prices. The world wheat 2023/24 wheat marketing year ending stocks-to-use ratio is projected to be 32.5% compared to a 10-year average of 35.2% 

The 2023/24 wheat marketing year U.S. wheat stocks-to-use ratio is projected to be 33.7% compared to a 10-year average of 43%.  

2024 Oklahoma and Texas wheat prices are expected to be around $6.20. Well above-average 2024 U.S. and world wheat production could result in a price of $5.33. Well below-average U.S. and world wheat production could result in prices $9.95. 

If I was a betting person, I’d put the limits at $5 and $9 knowing that, in today’s volatile market, prices could break these limits.