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Wheat price likely to peak in October
STILLWATER, Okla. – This year’s soaring wheat prices are likely to peak in October, according to market analysis provided by Oklahoma State University’s Division of Agricultural Sciences and Natural Resources.
“We have every indication that is going to be the case, unless something unforeseen happens with wheat production out of Argentina and Australia,” said Kim Anderson, OSU Cooperative Extension grain marketing specialist.
After the U.S. Department of Agriculture released its wheat supply and demand report on Sept. 12, the Kansas City Board of Trade’s December wheat contract price peaked at $8.80 and then fell to $8.06, finally closing at $8.25 on Sept. 13. The 74-cent decline was about 26 percent of the $2.80 price gain since mid-July.
“To break the uptrend, the December contract price must go below about $7.50,” Anderson said. “The December contract has price support at about $8 and $8.50 provides resistance. I have the December contract price movements divided into 50-cent price ranges.”
The market’s initial reaction to the USDA wheat report was bullish. Wheat stocks are tight with 2007-2008 U.S. wheat ending stocks estimated to be 362 million bushels, the lowest since the 1995-1996 marketing year’s 376 million bushels.
“My records go back to 1960 and ending stocks have not been this low,” Anderson said.
The U.S. wheat stocks-to-use ratio for 2007-2008, projected use divided by projected ending stocks, is projected to be 15.77 percent. This breaks the 1995-1996 record of 15.79 percent.
World projected wheat ending stocks for 2007-2008 were lowered to 4.13 billion bushels, the lowest since the 1977-1978 marketing year’s 4.01 billion bushels.
The world’s wheat stocks-to-use ration is projected to be a record 18.5 percent compared to a 5-year average of 23.8 percent.
“Strong prices have been welcome news, but it’s also important for the general public to remember that not every wheat producer in Oklahoma is able to share in these higher prices: Generally, only producers in the Panhandle were able to raise a good crop,” said Mark Hodges, executive director of the Oklahoma Wheat Commission.
Hodges said other state wheat producers, as well as grain elevator operators, suffered mightily from a springtime freeze and excessive rains that devastated Oklahoma’s overall wheat crop.
“While grain prices in general are strong, we’re still concerned about the financial health of many wheat producers in the state,” Hodges said.
Wheat can easily account for more than $1.5 billion to the collective economy of Oklahoma’s rural areas in a normal crop year.
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REPORTER/MEDIA CONTACT:
Donald Stotts
News and Media Relations Manager
Agricultural Communications Services
143 Agriculture North
Oklahoma State
University
Stillwater, OK 74078
Phone: 405-744-4079
Fax: 405-744-5739
E-Mail: donald.stotts@okstate.edu
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