How low will spring wheat acres go?
That’s the question being pondered in the wake of a United States Department of Agriculture report that forecast farmers will shift wheat acres into corn and barley.
A North Dakota analyst thinks the USDA’s spring wheat acreage forecast is still too large, even though it sees fewer acres than last year.
“It’s still way too high,” said Mike Krueger of The Money Farm, a farmer advisory service.
“The report showed North Dakota hard red spring wheat acres down 200,000. I think it could be down 600,000-800,000.”
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The USDA forecast that American farmers will plant a record 75.4 million acres of soybeans, an increase of three percent from 2003. Corn area is to rise to 79 million acres from last year’s 78.4 million, but that’s more than a million acres short of what most market analysts had predicted.
Wheat is expected to fall to 59.5 million acres from 61.7 million acres in 2003, slightly lower than many analysts’ expectations.
Corn prices rose on the report because most market watchers had expected more corn acres. Canadian barley prices could be affected if the U.S. corn crop winds up smaller than expected.
Krueger said analysts and traders should not have been surprised by the loss of corn acres to soybeans.
“When you see the rally on soybean prices, soybeans are the most profitable thing out there to plant, especially with high fertilizer prices,” said Krueger. Corn requires more nitrogen than soybeans.
Canadian Wheat Board analyst David Przednowek said the USDA report, based on a farmer survey in the first 10 days of March, will not be the last word. American farmers have a few weeks yet to make final decisions, and if prices rise for competing crops, wheat area could fall more.
“If you look at crop budgets, corn and soybeans are a lot better bet than wheat,” said Przednowek.
“The report did show a decline in spring wheat acreage, but there’s probably more room for that to fall given strong new-crop soybean prices.”
