The USDA projects Australia’s 2012 wheat production to be 955 million bushels compared to ABARES’ 2012 estimate of 828 million bushels. USDA’s projection is well above the average and ABARES’s projection is near the five-year average. The point is that Australia’s 2012 wheat production will probably be an average wheat crop and that the production may be 250 million bushels (24 percent) less than 2011 wheat production.

Argentina’s 2012 wheat production is projected to be 423 million bushels compared to 551 million bushels in 2011 and a five-year average of 467 million bushels. Even though Argentina’s wheat production is projected to be 84 million bushels (15 percent) less than last year, analysts appear to not have given it much attention. Argentina’s below average wheat production may have as big a price impact as Australia’s average production.

Both world and U.S. wheat ending stocks are projected to be slightly below average. The stocks-to-use (ending stocks divided by annual use) ratios are a higher percentage below average than the ending stocks estimates. World and U.S. wheat stocks have declined from abundant in June and July to relatively tight now.

All of the above makes the drought situation, winter wheat planting conditions, and additional planted acres more important price-wise.

If the 2013 U.S. winter wheat crop does not get established and/or if the acres do not get planted, wheat prices should react relatively soon. However, if the winter wheat crop gets established, the price impact should not happen until next spring.

About July 16, the Kansas City Board of Trade December wheat contract started a side-wise price pattern between $8.69 and $9.57. The price has challenged the $9.57 resistance level three times and the $8.69 support price three times. Since Aug. 16, the December wheat contract price has not traded below $8.86.

About the only thing that could cause the KCBT December wheat contract price to break the $8.86 support price is if Australian or Argentine wheat production is above average. It may be November before a solid Australian and/or Argentine wheat product estimate is available.