Wheat Acreage Projected Lower

NASS report shows increased HRW acres and decreased durum acres. Compiled by staff

Published on: Apr 7, 2006

USDA's National Agricultural Statistics Service annual U.S. planting intentions report for the 2006/07 marketing year shows increased hard red wheat planted acres nearly making up for a 36% decline in durum, and shows a net 0.2% decline in all-wheat planted acreage.

Joe Sowers, U.S. Wheat Associates market analyst says the severe durum decline can be attributed to record setting price deterioration based on current large supplies in North America, while the slight decline in hard red spring acreage is the result of soybean acreage expansion displacing wheat.

A large increase in durum import demand from North Africa and Europe, due to drought in the region last year, has pushed U.S. durum exports up by 35% year to date. "Nonetheless, U.S. durum supplies are at historic levels, 60% higher than last year, a 600,000 ton increase," Sowers says. "Durum prices have declined as a result."

In 2004/05 durum prices averaged $5.09/bushel, a $0.68 premium to HRS 14% protein, down significantly from the 2003/04 average $5.35/bushel, $1.12/bushel premium to HRS. Year to date durum prices have averaged $4.60, a $0.06/bushel discount to HRS. As a result, area planted to durum is expected to drop by 37% (935,000 acres) in 2006/07. The biggest decline is expected in North Dakota, planting 39% or 780,000 acres less than last year.

The expected decline in HRS acreage comes during a climate of high prices, Sowers explains. Current HRS prices are $0.25/bushel higher than last year and $0.47/bushel higher than 2003/04. Furthermore, inclement weather threatening the HRW crop is expected to be supportive of future HRS prices, he adds.

An increase in HRS planted acreage had been anticipated. The largest acreage declines are expected in North Dakota and Minnesota of 300,000 acres (4%) and 250,000 acres (14%) respectively. HRS plantings in Montana are expected to increase by 350,000 acres (17%) this year.

"Soybeans were the benefactor of the reduced HRS and durum plantings, with acreage rising 7% over last year," Sowers states. Soybean acreage in North Dakota, the largest HRS and durum state, is to rise 1.2 million acres, 41%.

"Trade sources commented that soybeans, have benefited from genetic improvements and have not suffered growing problems in recent years," he says. "On the other hand, HRS farmers in the Red River valley, who make up a large portion of the HRS area in North Dakota and Minnesota, suffered from fusarium problems last year, a situation which possibly affected planting decisions this year. New genetically modified soybean and corn varieties have been adapted to more northern growing areas, perhaps permanently displacing wheat acreage."

Plantings in the 3 largest winter wheat states were up last fall with acreage in Kansas, Texas and Oklahoma combined up 500,000 acres (2%). Unfortunately, crop conditions there remain very poor due to drought conditions, Sowers concludes.