A Whole Lot of Wheat in the World

The commodity markets were closed yesterday for the New Year Holiday. I was going to do a yearly review of market prices, but didn't want to begin the new year on such a depressing note for my wheat growing friends. So instead, we will discuss the world wheat situation -- which similar to prices now is different from this time a year ago.

USDA Chief Economist Joe Glauber shares an economic rule of sorts in discussing the current world wheat production which is about 8 and 1/2 percent more than a year ago however stocks are only 4 percent higher than 2012.

Glauber: "Economists always talk about how high prices cure themselves in one sense. In the sense of bringing in more production. But we are still in relative tight markets for wheat. We're seeing strong world use -- strong food use probably record food use around the world this past year."

However he says with record supplies around the world

Glauber: "This has contributed to the lower prices we've seen here in the last quarter of 2013."

USDA is projecting that U.S. prices for wheat will fall 11 percent this season even though we are expected to produce 6 percent less wheat unlike the rest of the world.

Glauber: "Looking forward certainly next year we will be focused like we always are on weather particularly in the former Soviet Union and the Black Sea region which has become such an important part of the trade picture for the rest of the world and certainly has been source of two of our price spikes over the last five years. I think that will be some of the big things in the wheat market."