At this writing, the wheat market is offering about $3.50 for June 2004 delivered wheat. However, a lot can happen price-wise between now and harvest. Changes in supply and demand conditions could result in $3 or $5 June wheat prices.

Benchmarks may be used to anticipate price changes. Important benchmarks are U.S. and world wheat 2004/05 marketing year production and wheat use and China.

Some analysts are predicting that U.S. 2004 wheat production will be about 2.2 billion bushels compared to last year's 2.34 billion bushels and a five-year average of 2.13 billion bushels.

For the 2003/04 marketing year, U.S. domestic wheat use (food, feed and seed) is projected to be 1.22 billion bushels compared to a five-year average of 1.27 billion bushels. Wheat used for food has declined about 40 million bushels since 2000.

United States wheat exports are projected to be 1.15 billion bushels compared to a five-year average of one billion bushels. Only 854 million bushels of wheat was exported in the 2002/03 marketing year.

There are two important points to glean from the above. First is that wheat used for food has declined and probably will not increase during the 2004/05 marketing year.

Second is that exports for the 2004/04 marketing year are almost 300 million bushels higher than for the 2003/04 marketing year. Higher U.S. wheat exports are because of reduced 2003/04 marketing wheat production in Eastern Europe and former Soviet Union countries and above average world wheat consumption.

Total 2003/04 U.S. wheat use is projected to be 2.37 billion bushels. With 2.33 billion bushels production and 75 million bushels imports, ending stocks are projected to increase from 491 million bushels to 534 million bushels.

2004/05 marketing-year world wheat production is projected to be 22.1 billion bushels or eight percent higher than 2003/04 production. 2003/04 marketing year world wheat use is projected to be 21.7 billion bushels compared to 22.1 billion bushels last year and a five-year average of 21.6 billion bushels.

Higher production for 2004/05 is projected in Eastern European and former Soviet Union countries. Until the 2003/04 marketing year when wheat production was below average, these countries exported sufficient amounts of wheat to reduce U.S. exports.

If world wheat production meets or exceeds the 22.1 billion bushels projection, 2004/05 U.S. wheat exports will be less than this year's 1.15 billion bushels. Lower U.S. exports will mean higher stocks and lower prices.

For the 2003/04-marketing year, world wheat ending stocks are projected to be 4.6 billion bushels compared to a five-year average of 7.2 billion bushels. Relative to wheat use, this is the lowest since 1972. If 2004/05 world wheat production is 22.1 billion bushels and world wheat use is 21.6 (the five-year average), world wheat ending stocks will increase 500 million bushels or 5.1 billion bushels. Relative to use, stocks will still remain near 1972 levels.

United States and world wheat stocks are tight. However, the world's wheat storage and transportation system is more efficient than it was in 1972. Also end users rather than governments now buy the majority of wheat. Current buyers do not want to own stores of wheat. Thus, prices are less responsive to low stocks and more responsive to changes in demand.

As the 2004 harvest approaches, the benchmarks to watch are U.S. wheat production of 2.2 billion bushels and world wheat production of 22.1 billion bushels. China's benchmark production is 3.2 billion bushels.