In a column I wrote last year, I suggested that the wheat market had produced a significant price low in December 1999. I still believe that is true. But, I am sure those who grow wheat and read this will take only small comfort from the fact that the price low still holds. It can only be a disappointment that wheat prices have not been able to stage a more significant price advance.

Chicago Board of Trade wheat futures prices have continued to struggle, moving mostly sideways and contained in the area of historical lows. Wheat production in the major exporting countries has declined successively over the past four years. And, although world and U.S. wheat stocks have declined, buyer inventory levels are still at least comfortable. U.S. export sales have been fairly successful, but not strong enough to push wheat prices to new highs.

As we have moved out of the winter season, the wheat markets focus is turning from demand concerns toward supply fundamentals. As the new winter wheat crop begins to break dormancy, worry about the hard red winter crop will be more critical than usual. Winter wheat planting conditions were far less than ideal. Obviously, this raises the question about plant stands.

The U.S. Department of Agriculture estimates U.S. planted acreage at 41.4 million acres — the smallest acreage since 1971. These points are not news. But the markets will begin to consider them more closely each Monday after April 1 as weekly crop condition and progress reports are issued.

As supply fundamentals capture the wheat markets focus in the weeks ahead, the demand considerations noted here will assume more and added importance. I expect these market forces will carry wheat prices into a modest uptrend, and I consider this marketplace action once again one of the major and critically important economic functions of the Chicago Board of Trade agricultural futures and options markets, that vital phenomenon called price discovery.

Ben George is a trading member of the Chicago Board of Trade. He can be reached through the CBOT Communications Department at (312) 435-3620 or kspr46@cbot.com . Material in this column is not intended to provide market strategy.