How Low Will Wheat Prices Go?
Averaged over the 1980-95 period, farm prices for wheat bottom out in July at about 94 percent of the season-average and peak in May at 106 percent. Based on the forecast season-average price for wheat of $3.45 per bushel for 1997/98, monthly prices would reach a low of $3.25 per bushel in July and rise to $3.65 by May 1998. However, in years of significant stock growth since 1980–that is, when stocks rose 20 percent or more from the previous year–wheat prices exhibited a different pattern, starting higher and declining earlier in the crop year and reaching a trough in late summer before generally rising through early May, but remaining below the price-pattern average across all years. Under this stocks-growth pattern, 1997/98 wheat prices would bottom out at about $3.35 in September and rise to $3.55 in May 1998. Outlook Puzzle Number 2: Will Ethanol Perform? High corn costs led corn used in ethanol to fall to 396 million bushels in 1995/96, down 26 percent from a year earlier. Corn
