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U.S. winter wheat acreage remains stable

We might have found the bottom for how low U.S. winter wheat acreage can fall.

Most analysts expected that with disappointing wheat prices, American farmers would again cut their winter wheat seeding in the fall by one to 1.5 percent, even though last year’s crop area was already the smallest since 1909.

The range of analysts’ forecasts in a Reuters poll was 30.1 to 32 million acres, down from last year’s 32.696 million.

However, in the U.S. Department of Agriculture winter crop seeding survey report issued Jan. 12, farmers said they planted 32.608 million acres, almost unchanged from last year.

Breaking it down by class, there was a tiny 320,000 acre decline in hard red winter wheat to 23.1 million acres, but offsetting that were slight increases in soft red winter and white winter.

The USDA also slightly raised its forecast of 2017-18 year-end U.S. wheat stocks by almost 30 million bushels, or three percent, to 989 million bu., which was the top end of the range of trade expectations.

Given the bearish acreage and stocks numbers, the winter wheat futures markets at Chicago and Kansas City dropped about three percent, the most for a single day since August.

Minneapolis hard red spring futures held up slightly better, falling about 2.6 percent.

Hard red spring wheat’s strong premium over hard winter has persisted this crop year, ranging from US$1.40 to $1.50 compared to a more normal level around $1, reflecting the relative shortage of protein.

The lack of decline in U.S. winter wheat acres might be explained by the lack of rotational alternatives. There simply are not a lot of other crops that can be seeded in the fall. Also, cow-calf producers like winter wheat for grazing.

As well, until this year, American winter wheat acres were fading fast as growers struggled to complete against overseas production, particularly wheat from Russia, which benefits from a weaker currency and closer proximity to major importers in North Africa.

Compared to five years ago, this year’s U.S. area is down 10.6 million acres, or about 25 percent. Compared to 10 years ago, it is down 14.2 million acres or 30 percent. Clearly U.S. wheat growers have been hit hard by Black Sea region competition.

However, U.S. production has not been dropping as fast as seeded area because the past two years have had yields average higher than 50 bu. an acre, compared to levels in the mid-40s 10 years ago.

As of Jan. 15, the hard red winter wheat region of Nebraska, Kansas, Oklahoma and Texas was mostly dry and snow free. The forecast for this week was for the dry weather to continue.

The condition of the wheat crop in that region at the end of December was worse than it was in the two previous years.

As well, below freezing temperatures have probed down into Kansas.

That state, the biggest hard red winter wheat producer, has almost no snow cover, and so there are worries that the dry cold could have hurt the crop in some areas.

As always, much depends on spring rain. The La Nina that is contributing to the dry conditions in the southern Plains is expected to weaken into a neutral state by spring, leading to the potential for normal spring rain. However, if there is a delay, some thin-looking wheat might be plowed up and reseeded with a spring crop.

That would provide modest price support, but a real turn-around in the wheat market would require a widespread crop weather disaster in major growing regions, bigger than last year’s dryness in North America or Australia’s problems.

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