Winter wheat production is forecast to increase to 1.591 billion bushels, up 6.1% from last year's 1.499 billion bushel crop. The USDA estimate was 35 million bushels above market expectations according to a Dow Jones survey. Most of the increase is in hard red winter wheat thanks to favorable prospects in the central Plains. The Kansas state-average yield forecast is 44 bushels per acre, up from 37 bushels last year.

Projected 2005 total wheat production is 2,185 million bushels, up from 27 million bushels from last year. USDA has assumed total spring plus durum wheat production of 594 million bushels, down from 659 million last year.

USDA's first 2005-06 wheat supply/demand forecasts are somewhat negative for the price outlook. Exports are likely to decline sharply due to lower demand from China and larger competing supplies in the EU and Former Soviet Union. USDA projections call for exports to decline to 950 million bushels, down 100 million bushels from the 2004-05 estimate. Ending stocks are forecast to climb to 678 million bushels, up substantially from this season's 541 million bushel estimate. USDA's season average price forecast for 2005-06 ranges from $2.55 to $3.05, down from $3.39 in 2004-05.