Faced by the lowest average wheat prices in a decade, U.S. growers slashed winter wheat plantings to their lowest level since 1909, when USDA began its wheat records. The 10 percent cut in acreage from 2016 sets the stage for potentially the smallest harvest in four decades of winter wheat, used in bread and other baked goods.
There is little risk of a shortage, however, because the U.S. wheat stockpile has been swelling for years. When the winter wheat harvest begins in the spring, there will be a six-month supply in U.S. grain bins, says USDA. The global stockpile at the end of the current marketing year is estimated at a record 253.3 million tonnes, more than a four-month supply.
Farmers are expected to curtail wheat and corn plantings this year in favor of larger soybean and cotton plantings. Soybean prices are a relative sunny spot in a grim landscape of low commodity prices since the collapse in 2013 of boom times that began in 2006.
Based on a survey of growers, USDA estimated winter wheat plantings at 32.383 million acres, the smallest on record after 29.1 million acres in 1909. The crop could total 1.1 billion to 1.2 billion bushels, smallest since 1.186 billion bushels in 1972, based on the three-year average for land abandonment and yields. A possible constraint is that 27 percent of winter wheat is in drought areas nationwide, including 41 percent of winter wheat land in Kansas and 80 percent in Oklahoma. Those two states grow 29 percent of the crop.
The central and southern Plains, where hard red winter wheat is grown, accounted for the lion’s share of the overall decline in plantings. Nebraska is growing its smallest winter wheat acreage ever, 1.09 million acres, said USDA. Plantings in Kansas, the No. 1 winter wheat state, are down by 13 percent from last year.
Plantings of soft red winter wheat, used in biscuits, breakfast food and pie crust, are down by 6 percent compared to 12 percent for hard red winter wheat. Soft red winter wheat is grown mostly in the Midwest and South.
USDA projects a season-average price of $4 a bushel for this year’s wheat crop, the second-lowest farm-gate price in 11 years. The lowest would be the $3.80 a bushel forecast by USDA for the 2016 crop.
The USDA estimate of winter wheat plantings was much smaller than the 34.1 million acres expected by traders. At the Chicago futures market, wheat for March delivery rose by nearly 2 percent, said Agrimoney.