By: Dr. Kim Anderson, Oklahoma State University Grain Marketing Specialist
Currently wheat may be forward contracted in Northern Oklahoma for about $8. The 5-year average Oklahoma wheat price is $5.60.
Over the last few weeks, wheat prices have traded in 55 cent range. The KEN’23 (hard red winter wheat July futures contract) has traded between $8 and $8.55. The northern Oklahoma basis for the 2023 harvest delivered wheat has been about a minus 55 cents. Thus, wheat could have been contracted for harvest delivery between $7.45 ($8 – $0.55) and $8 ($8.55 – $0.55). Panhandle prices ($7.55 – $8.10) are 10 cents higher than Northern Oklahoma prices, and Southern Oklahoma prices ($7.00 – $7.55) are 45 cents less than Northern Oklahoma prices.
The world’s 2022/23 wheat marketing year production is estimated to be a record 28.7 billion bushels. Exporting countries with record wheat production were Russia, with 3.344 billion bushels and Australia producing 1.345 billion bushels. The 5-year average production for Russia is 2.873 billion bushels, and is 891 million bushels for Australia. Compared to last year, Russia alone is projected to increase exports by 370 million bushels. This more than offsets Ukraine’s 200-million-bushel decline in exports.
The 5-year average world wheat ending stocks is 10.533 billion bushels. 2002/23 wheat marketing year (June through May) ending stocks are projected to be 9.862 billion bushels. 2022/23 U.S. hard red winter wheat ending stocks are projected to be 274 million bushels compared to a 5-year average of 481 million. World and U.S. wheat stocks are relatively tight.
Other numbers include U.S. hard red winter wheat planted acres being 10 percent higher than last year. World wheat planted acres for the 2023/24 wheat crop year are expected to increase and the odds are that 2023/24 world wheat production will set a new record.
It must be noted that wheat prices have been on a downtrend since mid-October. There are signs that wheat prices may have bottomed out.
The point is that wheat may be forward contracted for 2023 harvest delivery for nearly $8 per bushel in Northern Oklahoma and I believe this is a relatively good price.
A caveat is that the only thing for certain is that the harvest price won’t be $8. A larger-than-expected world wheat crop should result in lower prices. The good news is that the next world wheat harvest to be exported is the U.S. hard red winter wheat crop in Oklahoma and Texas. Prices should hold relatively good, at least until then.