Will Lots of Stocks Push Wheat Area Down?
A big item in the news related to crop production has been the increasing estimates for wheat stocks. According to the USDA, stocks are projected up 19 percent from last year for the major exporting countries of Australia, Canada, the European Union, and the United States, in total. High supplies have put a damper on prices and enthusiasm for planting wheat will likely be down, especially for the Northern Hemisphere spring crop which will be planted in May and June.
USDA’s estimate for 2009/10 world wheat ending stocks was first projected at 182 million tons in May 2009, but the March estimate was revised to 197 million. The current estimate for ending stocks for 2008/09 is 166 million tons and 123 million for 2007/08. Favorable growing conditions pushed world wheat production for 2009/10 higher than expected from an estimated 658 million tons in May to 678 million in March.
World wheat prices have declined. US#2 hard red winter wheat averaged $205 per ton in February, down from $269 per ton last May. Over the same period of time, FOB Gulf prices of hard red winter wheat relative to #3 yellow corn prices decreased by 15 percent, and prices relative to US #2 soybeans decreased by 9 percent.
According to the USDA WinterWheat Seedings Report, a wet fall delayed summer crop harvesting and this combined with a lower price outlook limited last fall’s U.S. winter wheat seedings to a 97-year low.
Reports from Russia and the Ukraine indicate that winter wheat plantings were mostly steady. The Russian State Statistical Committee reports that total winter grain planted area for 2010/11 was 18.1 million hectares compared to 18.0 million the year before. Typically winter wheat makes up 80 percent of winter grains. It is still too early to estimate how much spring wheat will be planted. According to information from the Ukrainian State Statistical Committee, planted area there is 6.7 million hectares compared to 6.9 million last year. Overwintering conditions for winter wheat in Russia and Ukraine have been generally favorable.
A report from agricultural consultant Strategie Grains projects 2010/11 European Union wheat area at 25.8 million hectares against 25.5 million last year. Planting was down in 2009/10 because of difficult planting conditions, and changing intervention policy will reduce support for barley, leaving more area for wheat. Broadly across Europe, overwintering conditions have been good with few reports of hard freezes.
Agriculture Canada as of March 11 projects Canadian wheat seedings to be slightly lower than last year and slightly below the 5-year average due to lower prices. Ninety-two percent of Canada's wheat crop is spring wheat or durum and will be planted in May and early June.
Current USDA area and production estimates for grains and other agricultural commodities are available on IPAD's Agricultural Production page or at PSD Online.
Visit Crop Explorer www.pecad.fas.usda.gov/cropexplorer