A small survey of Texas and Oklahoma elevators indicates that about 75 percent of the 2012 wheat crop has been sold. This situation implies that sufficient wheat may be unsold to meet future demand.

The caveat is that the wheat may be owned by producers who have the financial capacity to hold out for higher prices.

An indication of this possibility is that after wheat prices broke out of the KCBT March contract sideways price pattern ($8.80), the KCBT March contract price fell about 80 cents.

Oklahoma and Texas elevator cash prices, depending on location, only fell 60 cents to 65 cents. To buy wheat to meet demand, grain buyers had to raise the basis 15 cents to 20 cents.

Now that U.S. wheat prices are competitive in the world market, the condition of the 2013 U.S. wheat crop may play a larger role in wheat prices.

Also, current wheat prices have little meaning to most wheat producers. Most producers are concerned with the potential June 2013 wheat price.

At this writing, the KCBT July wheat contract price ($8.28) is 13 cents higher than the March contract price ($8.15). Oklahoma and Texas Panhandle elevators are offering between $7.78 and $7.88 for harvest delivered wheat. The weather will determine if the June price is above or below these prices.

In the January USDA Crop Bulletin, 61 percent of Oklahoma’s wheat crop was rated Poor to Very Poor while 11 percent was rated Good. The Very Good category contained zero percent.

No USDA report for Texas wheat was given, but private reports indicate that crop may be in about the same condition as Oklahoma's crop.

Kansas wheat is in slightly better condition with 31 percent Poor to Very Poor and 33 percent Good. Only one percent of Kansas’ wheat was rated Excellent.

All that can be said about weather is that the 90-day forecast is for below average moisture in the Texas Panhandle, western Oklahoma and western Kansas.

Given that the wheat crop will probably come out of dormancy in dry conditions, the odds support well below average wheat production with an above average price.