09/18/08 Economist says no need for wheat to move higher

Farm and Ranch September 18, 2008 Wheat futures drove the grain and oilseeds markets higher in the first half of 2008. The crop was in short supply. The trade was in a frenzy - and even the world's politicians were worried. But things have changed. University of Illinois Extension Ag Economist Darrel Good says a large crop has been harvested in the U.S and around the world. Good: "The U.S. had its largest crop in 10 years and we just had a scenario here where U.S. and world inventories are accumulating. In the September report the projected increase in stocks was larger than last month. We see big crops in Europe getting bigger. Big crops in Russia getting bigger. The only trouble spots we have now are Argentina and some parts of Australia. But in total world wheat production is record large. We will be building inventories suggesting there is really not a need in and of itself for wheat prices to go any higher than what we are now." In fact - Good says an argument could be made that the price of wheat still needs to move lower. He says the original short supply problem for wheat was not related - as many have suggested - to the food versus fuel debate and corn being planted fence row to fence row in the United States. Good says it was actually a weather market. I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.