Rabobank has cut its price forecasts for wheat for the next year, warning that there is "little cause for optimism for prices", despite questioning a US decision to raise its forecast for global production.

The Dutch bank said that last week's US Department of Agriculture forecast of a 659m tonne world wheat crop for 2009-10 looked "somewhat optimistic", given the weather setbacks in many growing countries.

"It appears more likely that production will be closer to 650m tonnes, based on reduced plantings, lower fertilizer application and increasing weather concerns in Australia, Argentina and India," the bank said in a monthly briefing.

Argentina's harvest looked likely to come in at 6.5m-7.5m tonnes, below a US forecast of 8.5m tonnes, as "extremely dry" soil conditions held back plantings.

"The estimates for [Argentina's] total wheat area continue to fall, though there is consensus that it will stabilize at 2.75m hectares, 40% lower than last year," the note said.

'Burdensome fundamentals'

Nonetheless, the bank cut to $4.80 a bushel its forecast for Chicago wheat prices in the last three months of 2009, and to $5.00 a bushel for the first half of 2009, noting ample supplies of wheat despite its lower harvest estimate.

"There appears to be little cause for optimism for wheat prices over coming months," the report said, citing "burdensome fundamentals".

Prices were likely to continue falling well into the autumn as wheat from northern hemisphere harvests hit the market.

"There are few reasons to expect a rally in global wheat prices in 2010 with world stock levels building for the second consecutive season," the report added.