On June 20, 2013, the Central Oklahoma and Texas Panhandle wheat price is expected to be $7.25 per bushel.

An optimistic expected price is $9, and a pessimistic expected price is $6.50. Two thirds (67 percent) of the time, the price is expected to be between $6.50 and $9.

This expectation is a $3 spread and, in reality, it’s not wide enough.

One-third of the time, the price will be below $6.50 and one-third of the time the price will be above $9.

Wheat may be forward contracted for 2013 harvest delivery for about 60 cents less than the Kansas City Board of Trade (KCBT) July 2013 wheat contract price, which, at this writing, is about $8.20 cash.

Weather, and thus production, will determine future wheat prices. 

An example of this is a story told in Genesis. During seven good years of production, the Egyptian government bought and stored all excess wheat production. During the next seven drought years, the Egyptian government bought all the land in Egypt and much of the surrounding area.

The morals of this story are: in good times, save your wealth to cover bad times; and, you can’t predict what the weather will do.

History has shown that tight wheat supplies may be replaced in one above-average year of production. It takes about two years to replace tight corn stocks. This said, wheat and corn prices are expected to remain near current levels until next spring for wheat and maybe next August or September for corn.

The world’s 2012/13 wheat marketing year wheat supply is nearly harvested. After Argentina’s and Australia’s wheat harvests are complete in late December, no additional exportable supplies will be available before the U.S. winter wheat harvest in June.