Looking at farm commodities around the world, the wheat situation has changed dramatically over the past few months as there has been a huge recovery in wheat production after several poor harvest years. According to Agriculture Outlook Board Chairman Gerry Bange world wheat production could top last year by 73 million tons.
"That's more or less equivalent to adding another United States to the world production or possibly even adding another India," Bange says. "It's just a huge increase."
That increase in production is already making an impact bringing prices down from the incredible highs that were seen last summer. This season's average is forecast at $6.70, which would still be a record high.
"At this point we think about 75% of the crop has been marketed," Bange says. "This implies that the rest of the crop will be marketed at an average of about $5.20, but that number of course has to be used with caution because that covers a multitude of wheats."
The lower prices are one reason that U.S. farmers cut winter wheat plantings by 9% this year.