Wheat prices will need more than US planting delays to hold on to their gains of 20% over the last two months, Goldman Sachs has said.

The investment bank, restating a forecast of soft wheat prices ahead, highlighted that the hold-ups to US winter wheat sowings were affecting most the less important states for grain.

And even if these states did come in with weak harvests, strong US and global stocks would guard against wheat shortages.

"Weather delays do not justify strong concerns for the 2010-11 crop," Goldman Sachs said.

"Although wheat prices may remain volatile in the near term, we expect the market to refocus on the large wheat carryover [inventories] we expect within the next few months, creating downside price and returns risk from current levels."

Wheat prices would, in a year's time, be $5.50 a bushel. While above Tuesday's price of $5.14 a bushel for Chicago's near-term December contract, the forecast is well below the $6.56 ½ a bushel that investors are pricing in for December 2011 wheat.

'Amply supplied'

The report comes the day after Washington data showed farmers had planted 86% of their winter wheat, behind the 93% typically sown by now.

Plantings have been slowed by America's wet autumn which, besides making sowings difficult, has also delayed the corn and soybean harvests, so keeping ground normally ready for drilling tied up with standing crops.

This has affected in particular Corn Belt states, with Goldman Sachs noting that wheat plantings remained most delayed in Illinois, Indiana and Missouri.

"These states contributed 7.2% of 2009-10 winter wheat production, which contributed 70% of the total US wheat production," the bank said.

Assuming that the winter wheat crop in these states halved because of planting delays, "this would only translate into a 2.5% decline in US production, all else constant, and would not in itself change the fundamental picture for US wheat, which remains soft", the bank said.

Other analysts have pointed to the potential for sowing spring wheat on late-harvested land.

Goldman added:  "The largely realized robust 2009-10 crop on top of already comfortable inventory levels suggests both the US and worldwide wheat markets will likely remain amply supplied over the coming year."