Markets are struggling to deal with the record U.S. wheat and global inventories.
About 60 percent of the world’s annual wheat production has been harvested by Aug. 1 each year, according to Southwest Farm Press. USDA data projects 2016-2017 world wheat ending stocks to be 9.3 billion bushels.
The world supply must decline by at least 1.3 billion bushels for prices to go above the costs of production.
At current wheat prices, most farmers are losing about $2 per bushel, Southwest Farm Press noted. And wheat farmers are struggling with that.
But lower prices are needed to lessen production, which would result in lower supply and higher prices. It may, however, take several years of low prices to reduce planted acres enough to a have a significant impact on prices.
Lower prices are a motivator to reduce planted acres. And weather impacts would also have an effect on acres planted and harvested.
Since the 2008-09 wheat marketing year, in seven of the nine years, world production has a set a new record, the publication reported.
Relatively high prices in 2011-2015, coupled with favorable weather, resulted in an increase in wheat acres.