One thing for certain about wheat prices is that prices will change, and they will be volatile. Now is the time to design a strategy for selling 2012 harvested wheat.

The Kansas City Board of Trade (KCBT) December wheat contract price is about 38 cents higher than the KCBT July wheat contract price. This 38-cent price spread is a strong signal to store wheat at harvest until November. Other signals, however, indicate that wheat should be sold rather than stored.

Most grain elevators charge about $0.0013 per day ($0.04 per month) to store farmer owned wheat. Storing wheat from June 20 to Nov. 15 would cost about 19 cents per bushel (148 days X $0.0013).

If the wheat is sold at harvest, the proceeds may be used to pay production and harvesting costs for the 2012 crop and/or the costs to plant the 2013 crop. Production loan interest rates vary from producer to producer. For the example below, 5.5 percent interest is used.

If wheat is put in storage, the interest cost is about $0.00092 per day or about $0.028 per month. Storing wheat until Nov. 15 would cost about 14 cents per bushel.

The total cost to store wheat from June 20 to Nov. 15 would be 33 cents (19 cents + 14 cents). The market is paying 38 cents. The expected net profit from putting wheat in storage at harvest and selling the KCBT December wheat contract to protect the price compared to selling the wheat in June would be 5 cents per bushel.