The markets already are trading on the knowledge that world supplies are building for most major commodities. That puts a lot of pressure on the demand side to protect crop prices, especially with signs of another big harvest in 2005.
That's certainly the case in places like Kansas, where the annual wheat tour is revealing greater-than-expected yields and production.
The Informa number is based on a yield of 46.3 bushels per acre on more than 34 million acres of both soft and hard red winter wheat. More hard red is expected to go into the bin this year at slightly more than 1 billion bushels, up more than 150 thousand bushels over last year. Less soft red winter wheat is expected at the elevator, down 67 thousand bushels to almost 315 thousand bushels, the smallest crop in 15 years.
The numbers corroborate the findings on the annual Kansas Winter Wheat tour, which kicked off this week. Yield averages were placed at around 46 bushels per acre, up 10 bushels over last year. The higher yields, combined with relatively benign crop conditions, brought additional pressure this week on wheat prices.