Along with corn and soybeans, U.S. wheat prices reached a record high in 2013, just before the collapse of the commodity boom. The USDA projects that this year’s wheat crop will end the four-year decline in prices, partly because the harvest will be nearly one-half-billion bushels smaller than a year ago.
In an early look at this year’s likely harvests, the USDA penciled in a season-average wheat price of $4.25 a bushel, which would be 35 cents higher than the average for the 2016 crop. Output would be down by 21 percent. “The year-to-year reduction is due to a sharp reduction in planted area and projected lower yields,” said USDA’s WASDE report. Wheat plantings were the smallest since record-keeping began in 1919.
Total U.S. wheat production was projected at 1.82 billion bushels, the smallest crop since 2006, based on USDA’s survey of farmers’ planting intentions and the assumption of normal weather and yields; the wheat yield per acres set a record last year. Winter wheat, the dominant U.S. variety, was estimated at 1.25 billion bushels, down 25 percent from last year and the smallest harvest since 2002. The winter wheat forecast was based on USDA spot checks of fields and a survey of 11.300 growers in Kansas, Oklahoma and Texas. A blizzard hit western Kansas while USDA was gathering winter wheat data, complicating the task of estimating the size of the crop. The USDA estimate has a margin of error of 13 percent because the May report is made while the crop is still maturing.
Wheat is one of the three most widely planted U.S. crops, although it has lost ground to corn and soybeans in recent years. It is a staple food worldwide and, with rice, is one of the major grains directly consumed in the human diet. It is used in breads, pastries, cookies, breakfast cereal and pie crusts among myriad other products.
The sharply smaller U.S. wheat crop would draw down burdensome inventories. The U.S. stockpile at the end of this month, when the new marketing year opens, is estimated at 1.159 billion bushels, equal to a half-year supply. It would fall to 914 million bushels, equal to five months of usage, at the end of the 2017/18 marketing year.
While U.S. production is forecast to fall, the world wheat crop would be the second-largest ever, an estimated 737.8 million tons, a slight decline from the record 2016/17 crop. Global wheat stocks would remain record large.