American wheat production will fall about 20 percent this year, the U.S. Department of Agriculture reports, and global wheat consumption is expected to climb. Sounds like a recipe for higher prices, right?
Well it would, except for the fact that global wheat inventories are at their highest levels in eight years, largely because of a big jump in wheat production in China. As a result, wheat prices have slid in recent days, to around $5.89 a bushel.
The world's wheat growers will harvest a record 682.7 million tons, according to the USDA.
The Chinese wheat estimates represent an about-face from earlier this year, when a combination of drought and disease looked like it would result in significant production cuts.
All this, of course, is good news for everyone on the planet who eats. And it could off-set some of the pain consumers will feel from rising prices for corn and soy beans. The same USDA report showed that U.S. exports of corn and soy beans will be down sharply this year. American farmers produce half the world's corn and a third of the soy beans, which means that smaller harvests for those crops have a bigger influence on world markets than with wheat.