Wheat Prices Could Keep Declining, Says Commonwealth Bank of Australia

After the largest gain in over four months, wheat futures in Chicago fell again, and according to the Commonwealth Bank of Australia, wheat prices could continue falling.

“The global economic recovery is looking increasingly unstable,” Commonwealth Bank of Australia said in a note to clients today. “U.S. harvest pressure also remains a risk” and wheat prices could keep declining.

Wheat farmers in the U.S. planted about 13.907 million acres of spring wheat, an increase of 4.8 percent from 2009, according to the U.S. Department of Agriculture.

Including all wheat varieties, total bushels of wheat inventory as of June first stood at 973 million as of June 1. That's up from 657 million last year.

We've been wondering out loud at Wheat Wise for some time why farmers continue to do this. Why continue to plant wheat under these conditions? Why not change to crops with better potential returns and margins? How hard is that to understand?

Wheat farmers must understand that an enormous amount of wheat is being planted in countries that did very little wheat sowing in the past, and add to that the increased amount in the U.S. and there's not going to be a good price any time in the near future.