Over the last 30 years, the American wheat industry lost 30 percent of its acres to corn and soybeans.
A crop that once was seeded on 85 million acres of American farmland fell to 60.4 million acres in 2007.
So the recent United States Department of Agriculture projection for 65 million acres of wheat in 2008 would be a welcome respite for the beleaguered crop.
“It is certainly nice if we’re able to turn that acreage trend around and establish wheat as a competitive crop,” said Daren Coppock, chief executive officer of the National Association of Wheat Growers (NAWG).
Read Also
USDA’s August corn yield estimates are bearish
The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
With global wheat stocks at their lowest level in 30 years and U.S. stocks sitting at a 60-year low, it was inevitable growers would respond to strong wheat prices by ratcheting up the supply.
U.S. winter wheat plantings were up 1.6 million acres, with most of the increase attributable to the soft red winter wheat crop, which is up an estimated 21 percent over last year’s level. Hard red winter wheat acreage fell one percent.
Coppock said growers in soft red growing areas are taking advantage of their long growing season to plant winter wheat followed by a double crop of soybeans, which should generate more revenue than harvesting one crop of corn.
Spring wheat plantings are still anybody’s guess because there is expected to be healthy competition among the three major crops, but the USDA predicts a significant increase in spring wheat acres.
If that happens, the stage would be set for a potential softening in wheat prices.
Coppock said global wheat consumption has exceeded production in seven of the past 10 years but eventually, one or two of the major exporters will produce a bumper crop.
“As soon as somebody has a huge crop from somewhere and starts to take some of the pressure off, then those prices will tail down some,” he said.
What concerns him is that while wheat prices have doubled since 2002, prices for fuel and fertilizer have tripled over the same period.
“I can see what makes wheat prices come back down. But I can’t see what makes nitrogen and diesel inexpensive again,” said Coppock.
“What we’ve essentially done is moved the break-even point from $4.50 (US) per bushel up to maybe $6.50.”
U.S. Wheat Associates anticipates strong wheat prices will be around for at least another year because fierce competition for acreage will limit global wheat plantings.
“This muted supply response in the face of increased demand appears likely to support prices into the next marketing year and perhaps longer,” said the association in a Feb. 7 newsletter.
Whether prices rise or fall in 2008 will depend largely on weather, but Coppock said the long-term solution to building more profitability back into the wheat sector lies with embracing the same yield-boosting technology employed by the corn and soybean sectors.
“We’re stepping up the pace even more to get biotech traits deployed in wheat,” he said.
