Soft red winter wheat leads 1992 area drop – Illinois and other states plant fewer acres; soft red winter wheat ending stocks predicted low for 1991/92; hard red winter wheat planting down for 1992/93, 1991/92 ending stocks predicted low; hard red spring wheat exports forecast up for 1991/92, 1992/93 planting area unchanged; durum wheat prices reduced – U.S. Dept. of Agriculture, Economic Research Service Report
SRW producers reacted to yield declines and quality problems over the past 2 years by reducing plantings 7 percent.
Illinois led the decline, planting 200,000 fewer acres, while Arkansas, Georgia, Louisiana, and Missouri each posted a drop of 100,000 acres. Although Ohio posted a slight increase from a year earlier, seedings remained more than 200,000 acres less than for the 1990 crop. Program participation rates are lower in SRW areas than in most wheat producing States, so reduced ARP did not do as much to boost area planted. Production prospects for 1992 are further clouded by some reported problems. Indiana reported winter wheat as mostly poor to fair at the beginning of February, while Missouri reported mostly fair to poor. However, it will be very difficult to assess yield prospects until the wheat comes out of its dormancy stage.
SRW 1991/92 Ending Stocks Down
SRW ending stocks for 1991/92 are forecast down to 36 million bushels, a very low carryover, but typical of SRW when overall stocks are low. Earlier in the year, large discounts for low test weight SRW during 1991/92 led to speculation that some might hold a significant quantity of SRW until the new crop is harvested, to blend it with higher test weight wheat.
Hard-Red-Winter-Wheat Area Planted for 1992 Down Slightly
Texas posted a drop of 300,000 acres in winter wheat seedings for the 1992 crop. This was a major reason for the drop in hard red winter (HRW) area. However, Texas normally does not use a significant portion of the area planted to wheat for grain production. Instead, it uses some of its wheat planted area for haying or grazing. The wheat planted area that is harvested for grain in Texas varies from less than 50 percent (when livestock prices are favorable and weather is bad for wheat) to as high as 88 percent (in 1975 when wheat prices were high). Despite the decline in Texas wheat seedings, area harvested there may increase. In South Dakota, where last year’s yields were good, area planted increased 150,000 acres. HRW production prospects will be difficult to gauge until the crop comes out of dormancy; however, Kansas reported that the wheat crop looked good in late January, a marked improvement from fall crop conditions there.
HRW 1991/92 Ending Stocks Forecast Lower Than 1973/74
HRW ending stocks in 1991/92 are forecast at only 152 million bushels, lower than in 1973/74. Feed and residual use in 1991/92 is forecast to drop, reducing domestic use 21 percent to 540 million bushels, while strong demand from China and the former Soviet Union boosts forecast exports to 570 million bushels, compared to only 368 million bushels last year.
Hard Red Spring Wheat Exports Forecast Up 89 Percent in 1991/92
Based on a strong sales pace to date, hard red spring (HRS) exports are forecast to reach 380 million bushels, driving the expected 1991/92 ending stocks down to only 100 million. This would represent record exports and the lowest stocks since 1973/74. Prices for HRS exceeded $4.70 per bushel in Minneapolis during the first week of February, providing ample incentives for HRS producers to plant wheat on available flex acres of other program crops, such as barley base.
White Wheat Area Largely Unchanged for 1992
Planted area was unchanged in Washington and Idaho, with a small increase in Oregon. High program participation, the lower ARP, and the prospect of sharply reduced competition from Australia in the world white wheat market led some analysts to expect an increase in planted area. However, dryness during the planting period may have caused some producers to plant less, and those producers may plant additional white spring wheat. Although Oregon crop conditions were poor to good in late January, by early February they had improved to fair to good. Washington reported 80 percent of its winter wheat crop as good and 20 percent fair. White wheat ending stocks for 1991/92 are forecast at only 42 million bushels, the lowest since 1973/74. Moreover, 29 million bushels of white wheat are in the Food Security Wheat Reserve which can only be accessed by presidential authorization.
Durum Wheat Prices Hit Large Discount
Durum wheat tends to be a somewhat separate market, with prices set by supply and demand factors that can be significantly different than the rest of the wheat market. Durum supply in 1991/92 is little changed from a year earlier, but exports have slumped as they faced increasing competition in the world market from larger Canadian and EC supplies. Moreover, domestic mill grind of durum has also dropped off significantly. Facing sluggish demand and the prospect of ending stocks almost unchanged from beginning stocks, durum prices have been unable to rally as much as other wheat classes. For much of the year, durum was the cheapest wheat available in the United States. If this price relationship continues, many durum producers are likely to plant HRS instead of durum for the 1992 crop. [Figures 16 and 17 Omitted]
COPYRIGHT 1992 U.S. Department of Agriculture
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