Darrel Good, the academic who shook corn markets last month, has provided hope for wheat investors – by saying that prices have fallen so far that farmers may be tempted to walk away.

The University of Illinois Extension economist added a second factor on which wheat bulls might be able to pin their hopes, beyond the risk of a poor Australian harvest to which the market is already attuned.

With the price of Chicago's September wheat contract falling to below $5 a bushel this month, from $7 a bushel in early June, and cash prices even lower, farmers may be tempted to cut wheat plantings for a second year.

'Modest price recovery'

"Current low cash price bids for the 2010 soft red winter wheat crop could lead producers to further reduce seedings this fall," Mr Good said, highlighting the potential for a "modest price recovery" in wheat.

The average spot cash price of red winter wheat in southern Illinois had fallen nearly to $3.20 a bushel, he said.

US winter wheat farmers will soon to be turning to planting decisions, with only 9% of the 2009 crop still to be harvested, official data on Monday showed.

Yield question

Mr Good's report came as Goldman Sachs warned that the "wheat price upside remains limited", citing good crop conditions at a time of ample global supplies.

"The optimal Northern Hemisphere growing season reinforces our expectations of a global wheat surplus next year on top of already high inventories resulting from last year's robust harvests," a report from the bank said.

Mr Good provoked controversy among corn investors in July by forecasting that the good condition of US corn crops may have put them on course for a yield of 163.2 bushels per acre, far above the official estimate of 163.2 bushels per acre.

Mr Good's thinking has since been echoed in other reports, including one from Informa Economics last week which said that corn yields could come in at 164 bushels per acre.