Winter wheat planting is down around the world, fueling forecasts for a 2009 price rebound.
The International Grains Council predicts a 1.8 percent decline in total world wheat area but that was an early forecast.
Mike Woolverton, a grain economist with Kansas State University, expects a bigger drop after witnessing what happened in the United States.
“Planted acreage is down. We don’t know by how much but down perhaps significantly,” he said.
Hard red winter acres fell slightly but the crop has emerged nicely.
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“The Great Plains winter wheat crop is in excellent condition, the best condition it has been in for years,” said Woolverton.
The problem is with the soft red wheat acres in the eastern corn belt, where plantings are down an estimated 20 to 25 percent.
Growers in Iowa, Illinois, Indiana, Ohio and Kentucky weren’t hapy with soft red wheat prices this fall and were delayed in getting back onto the fields after an extremely late corn and soybean harvest.
It was the same story in Ontario where soft red seeding is down 24 percent, said Stan Skrypetz, wheat analyst with Agriculture Canada. The hard red winter wheat crop in Western Canada is also down by roughly 20 percent due to a late harvest. In Ukraine, winter crop area is up but wheat area is reportedly down.
Skrypetz agrees with Woolverton that world wheat plantings could fall more than the IGC’s 1.8 percent forecast but even using that figure, global production would fall by five percent to 647 million tonnes given a return to normal yields.
“That should be helpful,” he said.
Woolverton expects wheat prices to rebound early in 2009, led by the shortage of quality milling wheat.
“As we move into the end of this year and the first part of next year, we’re going to start seeing demand come back pretty strongly for high protein milling wheat,” he said.
“I look for prices to recover going into the spring months.”
Skrypetz said both demand and prices should be on the rise in the new year, although he expects a different class of wheat will be leading the charge.
“I think where the demand is going to pick up is for durum wheat.”
Exports of durum have been slow but that’s about to change. Buyers have worked their way through reserves and ocean freight rates are favourable for moving the crop.
“(Prices) should be picking up after Christmas,” said Skrypetz.
At least that’s what logic would dictate.
“The only problem is with this economy nothing seems to be working anymore,” he said.
Skrypetz is more interested in following production estimates than acreage forecasts because global wheat acreage stays fairly static from year to year while yields can fluctuate dramatically.
“That’s where the dry conditions can be a factor,” he said.
Weather maps show October precipitation was below normal for Russia, Ukraine, China, India and Pakistan, five key winter wheat growing countries. Dry conditions continued as of Nov. 19, according to the Canadian Wheat Board’s latest world weather report.
If any of those regions have a drought in 2009, wheat production could approach 2007 levels of 611 million tonnes, which would be down substantially from this year’s 682 million tonne harvest, said Skrypetz.
Reports of farmers in Ukraine and other regions applying less inputs to their crops won’t help prospects.
Woolverton just returned from a trip to Russia where the government recently announced that it is going to become a much bigger player in wheat markets. Nitrogen fertilizer plants are being built near the Caspian Sea to that end.
During the trip, he discovered that Ukrainian farmers are just starting to fertilize their crops again after a long hiatus that began in 1991 when the government stopped supplying the input.
On the flight back, Woolverton pulled out a calculator and did a little math.
“If they start fertilizing their crops, they could easily double production in the former Soviet Union,” he said.
That is a significant looming threat to North American wheat producers.
