Good Condition of U.S. Winter Wheat Crop Causes Prices to Drop

The U.S. Department of Agriculture report was so good for wheat, that it has exceeded last year's condition by a whopping 55 percent for the same time frame.

As of October 26, 65 percent of winter wheat was in either good or excellent condition said the USDA report.

With the plethora of wheat available, wheat futures dropped 15.5 cents to $5.14 a bushel on the Chicago Board of Trade.

Much of this abundance came because farmers saw the amazing price of $13.495 a bushel on February 27, and so planted far too much, thinking it would profit them. Unfortunately, they never seem to learn that once the price has elevated to such levels, there was no way it could continue on because of the obvious surge in planting, which would ultimately drive the prices down, as supply increased. That, of course, is what has happened.

Another key factor has been the abundance of rain, which along with the huge sowing, has produced a huge crop.

Global wheat harvests could increase by 11 percent to reach a record of 680.2 million tons. It's also estimated that stockpiles around the world could grow by 21 percent to 144.4 million tons, according to the USDA.