Weather and Economics Cutting Wheat Acres
Analysts expect forecast of wheat to decrease.
Jason Vance
Published: Oct 30, 2008
USDA released the first nationwide crop rating for wheat on Monday and estimated 84% of the crop has been planted and 69% has emerged. It will be Jan. 12 before they have official acreage to report but analysts already have some forecasts and they show a decline in the number of acres of winter wheat this year.
Arlan Suderman, Farm Futures market analyst, anticipates farmers have significantly reduced their winter wheat acreage in the eastern Midwest and in parts of the South, and based on how the fall has evolved probably in southwestern Midwest in Missouri and Arkansas will see some cuts as well.
"Initially wheat was losing acres because prices were falling into negative margins with input costs rising while wheat prices were falling and it simply wasn't a profitable alternative and corn and soybeans were more appealing to producers," Suderman says. "As the fall progressed and we saw a late harvest emerge that hurt the chances for wheat to get the acres it needed even further, because many of those wheat acres are double cropped behind soybeans in the Midwest and South. The late harvest, particularly in Missouri, should end up with fewer acres being planted, because it's simply getting late and with very little financial incentive to plant late."
Suderman predicts steady to higher wheat acreage in the Plains particularly in Oklahoma and Texas due to ample moisture in the High Plains.
"The moisture is giving us ideal grazing conditions for cattle and with relatively high corn costs cattle grazing is very desirable at this point," Suderman says. "They can hold them out of the feedlots just a little bit longer if they have good wheat pasture to put feeders on."
The question is how many of those acres will be harvested. Suderman says many farmers may decide to keep cattle on the pasture next spring and plant corn or beans after it or may pull the cattle in March and let grain develop for harvest.
"That decision will be based on wheat's price relative to the alternatives," Suderman says. That means relative to corn prices, soybean prices, to grain sorghum prices and frankly to cattle prices as well."
The Farm Futures analyst team is sticking with their previous estimate of 45 million acres of winter wheat, which is down from 46.6 million a year ago. Suderman says they will be surveying again later this fall and releasing new estimates at the Farm Futures Summit meeting in St. Louis in December.
"I anticipate we might see some further reductions particularly in the soft red winter wheat belt," Suderman says. "What's still a little bit of a mystery is how potential increases in hard red winter will offset the soft red winter, but at this point it looks like we'll have significantly more lost soft wheat acres than what we have gained hard red winter wheat acres."
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Tagged: wheat, winter wheat, farm, farm futures, Harvest
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