The USDA released the July 11, 2008/09 marketing-year production, and supply and demand estimates. Oklahoma's wheat production estimate increased from about 158 million bushels (mb) to 171 mb. Kansas wheat production was increased to 367 mb. Some analysts think that Kansas production should be closer to 380 mb. U.S. wheat production was projected to be 2.46 billion bushels (bb) compared to a 5-year average of 2.12 bb. Hard red winter wheat production was projected to be 1.04 bb compared to 962 mb production last year and a 5-year average of 894 mb. World wheat production was projected to be 24.4 bb.

   U.S. ending stocks are projected to increase from 306 mb to 537 mb and the U.S. wheat stocks-to-use ration is projected to increase from 13.2 percent to 23.1 percent. World wheat ending stocks are projected to increase from 4.26 to 4.89 bb. U.S. corn ending stocks are projected to decline from 1.6 bb to 833 mb. U.S. soybean ending stocks are projected increase from 125 mb to 140 mb compared to a 5-year average of 310 mb. Australian wheat production was increased to 919 mb, which is the third largest Australian wheat crop on record.

   About 40 percent of Oklahoma's estimated 171 mb wheat crop has been sold. During the last two weeks, the KCBT Sept wheat contract price has declined about $1.20 to about $8.49. Oklahoma's average cash price is about $7.60. Wheat prices are now low enough to be supported by corn prices. The CBT Sept corn contract price is about $6.95. Corn shipped into Oklahoma cost about 50 cents above the CBT Sept contract price ($7.55).

   The KCBT Sept wheat contract has price support at about $8.50. If the Sept contract price stays above $8.50 on Monday and Tuesday (July 14 & 15), wheat prices may gain about 50 cents. Closes below $8.50 will indicate a target price about 50 cents lower. Wheat price movements will depend on both the ongoing wheat harvest and 2008 corn crop conditions.

   Carry cost (commercial storage and interest) is about 28 cents between now and Nov 15 (commercial storage costs ~ 3 cents/mo, interest costs ~3.5 cents per month, total cost ~6.5 cents/bu/mo). This implies that there is about a 50/50 chance that storing wheat will be profitable. Consider selling one-third of the wheat now and one-third in late September or early October and the remainder in mid-November. Unless something happens to reduce corn production expectations or there is a major wheat crop failure, wheat prices peaked on June 26. If you cannot afford price and storage risk of $0.75 per bushel, consider selling it all now.