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How high will wheat prices go?
Oklahoma Oklahoma State University's Kim Anderson was teased by colleagues and producers alike earlier this year, back when he was predicting wheat prices would increase to $5 per bushel: Cash wheat prices in Oklahoma currently are hovering around the $7 mark. Anderson, OSU Cooperative Extension grain marketing specialist, said there are a lot of factors that have strengthened prices beyond what used to be a $5 "dream" price. "In early April, forward contract prices were about $4.10 per bushel, and then we got hit by a major freeze," Anderson said. "That brought prices up about 75 cents." At harvest time in early June, the abundant rainfall across the state helped push July cash prices in Oklahoma to about $5.50, another 65-cent increase. "Then problems occurred with the foreign wheat harvest," Anderson said. "Those problems resulted in another $1.65 increase in Oklahoma prices, for a total price increase, since April, of $3.15 a bushel." All of which helped put the current Oklahoma cash price, as of noon Thursday, Sept. 6, at about $7.25 per bushel. "For producers who have wheat to sell, I'd suggest staggering it into the market at about 20 percent at a time over the next three months," Anderson said. "If you don't have wheat to sell, ignore what's going on in the markets right now." What matters to producers without wheat, he explained, is the July 2008 contract on the Kansas City Board of Trade. That contract currently sits at $6.05, with a forward price contract of about $5.52 for June 2008 delivery. "We are in a weather market right now, with extremely tight wheat stocks," Anderson said. "So between now and next June it's going to be a rough ride. If there are problems with either the Australia or Argentina wheat crops, or if we have problems planting and raising the U.S. winter wheat crop, wheat prices are going to go through the roof." As a result, Anderson urges producers to not try and predict the market, and to keep their marketing plan as simple and straightforward as possible. Date: 9/11/07
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