Less wheat will likely be produced in 2008-09, but that does not necessarily mean prices will rally.
High fertilizer prices and the rapid deflation of wheat prices last fall caused winter wheat growers in some countries to cut seeded acreage.
The International Grains Council forecasts a one percent decline in wheat acreage for 2009, and because of reduced fertilizer use and a return to a normal yield trend, a five percent decline in production to 650 million tonnes.
However, because of large carry-in stocks, the total available wheat supply in 2009-10 is forecast to be 805 million tonnes, almost unchanged from the 804 million available in 2008-09.
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The world average yield climbed to 45.4 bushels per acre last year, up eight percent over the year before with generally bumper crops in the northern hemisphere more than offsetting drought in Argentina and Australia.
At this early point in the 2009 campaign, there are worries about dryness in China and the southern U.S. winter wheat belt and warm weather in India, but winter conditions have been good in Ukraine.
United States
The U.S. Department of Agriculture’s winter wheat seeding report said acreage planted in the fall dropped nine percent.
The biggest drop will be in soft wheat rather than hard types that compete more directly with western Canadian wheat. Soft red area dropped 26 percent to 8.29 million acres, hard red area dropped 3.25 percent to 30.2 million acres and white winter area dropped 3.92 percent to 3.62 million acres.
The crop is in winter dormancy now, but there are concerns about a drought in Texas and dry weather in Oklahoma and southern Kansas. Last year, Texas produced 8.3 percent of the U.S. winter wheat crop.
Rain in early February was expected to halt deterioration, but more rain will be needed.
Europe
French analyst Strategie Grains predicts a one percent decrease from last year in soft wheat area in Europe.
It forecasts that yields will be down four percent from last year’s bumper harvest, leading to a six percent decline in production.
European agricultural areas this winter generally have adequate to surplus moisture.
Russia and Ukraine
Huge production increases in these countries last year caused a flood of cheap exports that have pressured global wheat prices, particularly on low quality wheat.
Ukraine’s UkrAgroConsult consultancy predicts a seven percent decrease in wheat seeded area and lower average yield, leading to a forecast of a 19.1 million tonne wheat crop, down from 24.2 million tonnes last year.
However, large carry-in stocks should mean the country will have a total supply in 2009-10 similar to 2008-09. Moisture this winter has been favourable.
According to the USDA, Russia’s wheat area will be similar to last year. Crop establishment was spotty because of dryness.
China
China is the world’s largest producer of wheat, accounting for about 17 percent of global production. The International Grains Council forecasts a slight increase in China’s winter wheat crop area, prompting it to expect a 106 million tonne crop, down from 112.5 million tonnes in 2008.
However, the North China Plain, the country’s key winter wheat growing region, has been in a severe drought since the fall. The crop got off to a good start after seeding but then the moisture stopped.
It has not rained in Beijing since Oct. 26 and 43 percent of the winter crop, or 23 million acres, is affected by drought.
Some of the area is irrigated, but reservoirs and wells are under stress. One Chinese analyst has said the drought could have cut production by two to five percent so far.
India
India, the world’s second largest wheat producer, helped ignite prices two years ago when it began importing wheat to make up for a small crop.
Last year, production rose and it imported little wheat. The seeded area is slightly larger this year but the government expects production to be similar to last year’s 78.4 million tonnes. The wheat region was warmer than normal in January and some parts are a little dry.
Canada
Agriculture Canada forecasts that farmers will cut wheat acreage by 4.5 percent for the 2009 crop. However, a good part of that is already accounted for in reduced winter wheat seedings, which dropped by almost 19 percent to 2.27 million acres.
It will be several months before farmers start to work their fields. Fall and winter moisture has been good in the southern Prairies, but central Alberta and northeastern Saskatchewan have seen below normal rain and snow.
