The six-year price average in wheat is $6.55 and we’re still above that, says Welch. “The U.S. is becoming a smaller and smaller player in world wheat production. We really haven’t increased wheat production since 1960. It continues to grow around the world, and projections for 2013-14 are for an all-time record wheat crop.”

In 2013-14, the former Soviet Union was the largest wheat exporter in the world, with 24 percent of the world’s wheat market.

“USDA projects a 25-percent stocks-to-use ratio in wheat, from last year’s 26.7 percent. That’s a lower stocks-to-use ratio in light of all-time record wheat production. This means our consumption of wheat is keeping pace with the level at which we’re achieving record levels of production. Positive numbers on the demand side are compensation for what looks like a favorable production scenario of world wheat production.”

With a lower stock-to-use ratio in the current marketing year than in the prior marketing year, it sets the stage for higher wheat prices going into January, February and March, says Welch.

“Until corn sets a harvest low, I don’t think wheat is going to be able to stand on its own fundamentally. I would anticipate that we’ll finally set in a harvest-low on corn and allow both markets to achieve a little bit of a price escalation through winter, but particularly on wheat.

The outlook for wheat certainly is bullish in the short term, given what we know right now.”