By Joanna Newman
US FARMERS are likely to achieve a record crop yield for their soft red winter wheat this year due to the ideal temperature and humidity that has prevailed in most regions during planting and throughout the summer.
An expected all-time high yield of 47 bushels/acre has caused the USDA to raise its estimate of ending domestic wheat stocks to 2.33 billion bushels in its latest Supply & Demand report, up from last months forecast of 2.24 billion bushels.
This news of higher output comes hot on the heels of figures released last week showing the largest domestic wheat inventory for the month of June since 1988. This now stands at a burdensome 945 million bushels.
Even though farmers have planted their smallest spring wheat acreage since 1973, the US market is still concerned by massive oversupply of wheat.
Lack of storage space is already creating logistical headaches for farmers.
The recent 14% drop in maize prices has once again rendered wheat less competitive against maize as a feed grain, thereby cutting into domestic wheat consumption.
Against this grim backdrop, the Chicago July wheat futures contract closed on Monday, 12 July, at 233.75 cents/bushel, down from 235.8 cents just over a week ago.
The contract has lost a quarter of its value since the start of the year.