Wheat has lost a quarter of its land area since 1990 and is losing the competition against corn and soybean acres globally, according to Vince Peterson, U.S. Wheat Associates Inc. vice president of overseas operations. Peterson spoke at the Ag Issues Forum sponsored by Bayer CropScience on Tuesday at Commodity Classic in Anaheim, Calif.
"There is a widening gap between wheat production and consumption, and frankly, it is an understated concern,” Peterson says.
The bottom line is that wheat is losing the competition for net returns for producers compared with corn and soybeans since 2008, causing farmers to switch crops, Peterson explains. The U.S. has lost 60% of its wheat acres over the last decade, and the two main wheat-producing states of Kansas and North Dakota are losing wheat acres to corn and soybeans.
"The economics are not in favor of putting more wheat in the ground going forward,” Peterson says. Currently, the wheat value over corn and soybeans is at its lowest in five years based on new crop futures, he says.
If more wheat is not planted both in the U.S. and globally, there could be huge market ramifications in the next few years. Peterson says the market is on a trend globally to mirror 2008 prices, when wheat hit $20 per bushel.
In part, global stocks are short because the typical wheat-producing nations, including the Ukraine and Russia, are not producing as much wheat as they used to as they switch to corn and soybeans to meet global demand.
Peterson believes the industry must find some biotech traits that both wheat producers and consumers alike will accept. "This won't be easy, but we are seeing some softening on the biotech issue with Japan and Europe,” he says. "Biotech acceptance is crucial to the future of the wheat industry.”
For more information, check out the video with Vince Peterson.
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Wheat acres are losing ground to corn and soybeans at a faster pace, according to Vince Peterson of U.S. Wheat Associates.