Wheat prices have been going up like a stampede of cattle. The question is: “Can the cowboys circle the herd or is there a cliff up ahead?” An analyst warned that, “prices tend to go up on a staircase and down the elevator shaft.” I added, especially if the price rally is mostly caused by another commodity.

On June 13, Oklahoma and Texas cash wheat prices bottomed out. For many elevators, the low price was near $6 a bushel. Fifteen market days later, Oklahoma and Texas cash wheat prices were near $8.

In 13 trading days, the Kansas City Board of Trade (KCBT) September wheat contract price increased $1.78.The KCBT December wheat contract price increased $1.71. These price increases have happened with little change in the wheat supply and demand situation.

In the June 12 World Agricultural Supply and Demand Estimates, the USDA lowered the wheat 2012/13 marketing-year ending stocks from 735 million bushels to 694 million bushels. Ending stocks were estimated to be 728 million bushels in 2011/12 and the five-year average is 710 million bushels.

From the May to June WASDE reports, world wheat ending stocks were lowered from 6.91 billion bushels to 6.83 billion bushels. World wheat ending stocks were 7.2 billion bushels in 2011/12 and the five-year average is 6.51 billion bushels.

The U.S. wheat stocks-to-use ratio was lowered from 30.7 percent in May to 29.1 percent in June. The 2011/12 stocks-to-use ratio was 32.3 percent and the five-year average is 29.1 percent.

From May to June, the world stocks-to-use ratio was lowered from 27.4 percent to 27.2 percent. The 2011/12 world stocks-to-use ratio was 28.1 percent and the five-year average is 27.1 percent.