Bumper crop in wheat?

The charts may tell you one thing but the stories on the ground say something different. The latest news out of Canada is that there is a huge wheat crop, a 14% increase over last year and a record 80.8 million metric tonnes. The result is infrastructure that is at the breaking point. Domestic storage is full. Farmers have filled their bins, and you cannot sell it to elevators who do not have space. Crops are being left uncovered on the ground because there is a lack of silage bags. There is a shortage of rail cars to move grain to the coast and once  it gets to export centers there also is no storage. 

Nevertheless, wheat has been trading at a premium to corn.  Kansas City high protein wheat is selling at a premium which suggests that supply is down. There has been a nice rally in the CBOT wheat market.  So what should you believe, the evidence in Canada or actual prices?

Wheat is an international market and other growing areas have not fared as well. Simply put, the primary evidence always has to be the price action.  Excess buyers to sellers cause prices to clear at higher levels. Extrapolative evidence from story-telling may be more harmful than helpful for traders. Facts of inconsistency should not be ignored but the Bayesian prior should always be with the evidence with trends.