Kim Anderson, Oklahoma State University Professor and Extension Economist
There is good news and bad news - mostly bad. The bad news is that the USDA raised the U.S. wheat ending stocks estimate to 976 million bushels (mb) and world wheat ending stocks to 7.2 billion bushels (bb). World wheat consumption was lowered 56 mb. The last bit of bad news is that the corn production estimate was increased to a record 13.15 bb. The wheat used for feed estimate was lowered.
The only good news was that winter wheat planted acres were estimated to be 37.1 million acres (ma), down 14 percent from last year and the lowest since 1913. (Note that 1913 yields were 15.7 bu/ac compared to the last five years' average of 44 bu/ac.) Hard red winter wheat seedings are estimated to be down 12 percent, soft red winter wheat down 29 percent and white winter down 1 percent. Oklahoma planted acres are estimated to be down 9 percent and Kansas, down 8 percent.
Wheat stocks remain the most powerful influence on wheat prices. U.S. wheat ending stocks are projected to be about 976 mb (46 percent of an average U.S. wheat crop). World wheat ending stocks are projected to be 7.2 bb. The market reaction was a 30+ cent decrease in prices. However, lower planted acres does set the stage for higher prices IF??? yields are below average.
For wheat prices to substantially increase, U.S. wheat stocks need to be less than 600 mb. For U.S. wheat ending stocks to decline from 976 mb to 600 mb, 2010 U.S. wheat production would have to be less than 1.7 bb. During the last 35 years, U.S. wheat production has only been less than 1.9 bb four times.