As wheat farmers look ahead to the 2025 growing season, the focus turns to converting planted wheat into cash. The challenge, however, is predicting the two most unpredictable factors in the equation: bushels per acre and price. While it’s difficult to forecast with precision, developing a framework for price prediction is essential for making informed decisions about planting, harvesting, and selling.
The Role of Weather and Policy in Price Prediction
Predicting wheat prices is notoriously challenging. While agricultural policy shifts frequently, weather remains one of the most significant determinants of both crop production and market prices. As Dr. Luther Tweeten aptly stated in 1984, “Policy comes, and policy goes, but weather determines price.” Farmers have to make their price predictions with the understanding that factors like rainfall, temperature, and other environmental variables can dramatically impact yields.
Understanding the Starting Point: Current Prices as Predictors
Research has consistently shown that the current price of wheat serves as the most reliable predictor for future prices. As a result, the starting point for any forecast should be the price at the time of planting. In fact, when forecasting wheat prices for the 2025 harvest, using current prices as a benchmark offers a practical and relatively safe approach.
As of now, wheat forward contracts for the 2025 harvest delivery in various locations across the U.S. are as follows:
- Pond Creek, Oklahoma: $5.22 (KEN25 – $0.50)
- Perryton, Texas: $5.17 (KEN – $0.55)
- Weatherford, Oklahoma: $4.97 (KEN – $0.75)
The current prices stand at:
- Pond Creek, Oklahoma: $5.00 (KEH25 – $0.55)
- Perryton, Texas: $4.85 (KEH25 – $0.70)
- Weatherford, Oklahoma: $4.75 (KEH25 – $0.80)
Historical Price Trends: A Guide to Forecasting
Looking back at wheat price trends from 2009 through 2024 provides valuable insight into price patterns. In Pond Creek, Oklahoma, the average difference between January and harvest (June through August) prices is just $0.04. This suggests that the forward contract price is a reliable indicator of the average harvest price.
For the 2025 harvest, using the January forward contract price of $5.22 for Pond Creek, the projected harvest price could be approximately $5.26 ($5.22 + $0.04). However, past data also highlights the inherent volatility of these forecasts. From 2009 to 2024, the actual harvest price deviated from the predicted average by as much as $1.57 higher and $0.93 lower. These variations emphasize the uncertainty involved in predicting future prices.
Thus, the price range for the 2025 wheat harvest could span from a low of $4.33 ($5.26 – $0.93) to a high of $6.83 ($5.26 + $1.57). A more conservative estimate, based on average deviations, would adjust this range to $4.69 to $6.09.
Global and U.S. Wheat Supply Dynamics
Supply and demand factors play a crucial role in shaping wheat prices, and understanding these dynamics can refine price predictions. On June 1, 2025, global wheat stocks-to-use (STU) ratio is expected to be 32%, slightly below the 16-year average of 34%. Meanwhile, the U.S. hard red winter wheat STU ratio is projected to be 46%, aligning closely with the 45% average from the past 16 years.
However, notable differences emerge when examining major wheat-exporting countries. Argentina’s STU ratio is forecast to be significantly above average, suggesting stronger export supplies from the region. In contrast, countries like Australia, Canada, the EU, Russia, and Ukraine are expected to experience lower-than-average STU ratios, indicating tighter exportable wheat supplies.
Conclusion
Based on the available data and trends, a reasonable starting point for wheat prices at Pond Creek, Oklahoma, in 2025 would be around $5.26. However, the global and U.S. wheat supply situation suggests that this price may be adjusted upwards, closer to the 16-year average of $5.76.
For farmers and investors planning for the 2025 wheat harvest, this analysis offers a critical starting point for price prediction. By monitoring key variables such as weather conditions, STU ratios, and current prices, stakeholders can make more informed decisions in the face of inevitable uncertainty.
