Taking advantage of high wheat prices is straightforward. Promote the wheat within the money market. One other approach to take advantage of high prices is to make use of futures contracts or futures choice contracts. Taking advantage of high prices doesn’t must be troublesome.
What’s troublesome is figuring out if a value is a “high” value. In my view, the present wheat prices of $6.30 (Medford) and $6.38 (Perryton) are comparatively high prices (Desk 1).
One other query is, “Is the price the high price for a specific marketing year (June through May)?” Each time durations (2009/10 by means of 2020/21 or a given advertising yr) are necessary. The marketing-year query would be the most necessary and the toughest to find out.
At this writing, money wheat prices are about $6.30. Since June 2009, the very best month-to-month common value (adjusted for storage) was $8.51 (September 2012). The bottom month-to-month common value (adjusted) was $2.73 (October 2016). The common value for the interval June 2009 by means of Could 2020 was $5.15. The $6.30 value is $1.15 (23%) above the common value. The common June by means of August value (harvest months) for the 2009 by means of 2020 time interval was $5.42.
In my view, in comparison with June 2009 by means of Could 2021 prices, $6.30 is a comparatively high value. However 27% of the wheat prices through the June 2009 by means of Could 2021 interval have been above $6.30.
From a marketing-year perspective, $6.30 is probably not a comparatively high value. In June 2012, the common wheat value was $6.48. Prices went up from $6.48 to peak at $8.51 (September 2012). It was December 2013 earlier than wheat prices went under $6.48. The 2012/13 marketing-year value actions suggest that $6.30 was not a comparatively high value. Desk 1 exhibits that between September 2010 and August 2014, $6.30 would have been a comparatively low value.
Between August 2014 and June 2021, $6.30 would have been a high value. In 2016, $3.91 was the high value. In 2017, $4.57 was the high value. In 2018, $5.58 was the high value. In 2019, $4.59 was the high value. In 2020, $4.26 was a comparatively low value.
Desk 1 could point out that if wheat prices are above $7 (2011, 2013, and 2014), the percentages are that the prices are close to the highest. A value above $8.00 is a “no brainer.”
Analysis exhibits that one of the best value predictor is at the moment’s value. Fifty % of the time, tomorrow’s value will probably be larger and 50% of the time tomorrow’s value will probably be decrease than at the moment’s value.
In the course of the 2021/22 wheat advertising yr, there’s a 50/50 likelihood that wheat prices will probably be larger than $6.30.
A promote or retailer choice nonetheless must be made. Acquire all the knowledge wanted to make the choice (present value, greatest guess about future prices, price of manufacturing, monetary wants, and different components) and plan (don’t promote till tomorrow). If you happen to get up at night time worrying about decrease prices, promote some wheat. If you happen to get up at night time worrying about not having the chance for larger prices, retailer the wheat. If you happen to sleep properly, observe the plan.
One other different is to put in writing down three dates and value targets to promote wheat and have the self-discipline to observe the plan. Deal with issues you’ll be able to management moderately than components you’ll be able to’t management.
My conclusion is that $6.30 is a comparatively high (not essentially the very best) Oklahoma/Texas wheat value. Time will inform if I’m proper or improper.