Wheat Stocks Dropping; Seedings Lower than Expected

January 21, 2013 12:08 AM
Wheat Stocks Dropping; Seedings Lower than Expected

Global supply remains secure, however.

While both the U.S. and world supply of wheat is declining, wheat supplies remain ample around the world. That could be one reason why growers of hard red winter wheat surprised analysts by not seeding as many acres as expected.

According to USDA’s recently released Wheat Seedings reports, the projected seeded area for 2013 winter wheat is 41.8 million acres, up 1% from 2012. Wheat producers seeded about 29.1 million acres of hard read winter wheat, down 2% from 2012. Producers in Nebraska, Oklahoma and Texas planted significantly more acres this year while large acreage decreases occurred in Colorado, Kansas, Montana, and North and South Dakota.

"People were surprised that the winter wheat seedings were are low as they were," says Charles Soule, market analyst with CHS Hedging, in Saint Paul, Minnesota. "We had been hearing that they would seed a lot more acres this year."

Widespread drought and lack of moisture continues to be a concern across much of the hard red winter wheat region, and if wheat growers want to collect on crop insurance, they need to seed their fields.

There’s still a lot of old-crop spring wheat in the bin, Soule says. Producers have been reluctant to let go of it with conditions as dry as they are because they are unsure whether they’ll get another crop this year. "With one or two weeks of good soaking rains, they would sell it," Soule says.

Choices limited

It’s possible that some producers with better soil moisture conditions are planning to switch to corn or soybeans this year, Soule says. In the hard red winter wheat region, producers don’t have the option to plant spring wheat; they need to plant corn, soybeans or sorghum if they are not going to stick with hard red winter wheat.

Drought conditions in the hard red winter wheat belt have been brutal and tenacious. "We haven’t had enough precipitation to even begin to pull us out of the drought conditions," says Natalie Umphlett regional climatologist with the High Plains Regional Climate Center in Lincoln, Nebraska.

"For the most part, 60-day precipitation is 75% below normal for most of the region," Umphlett says. "The main thing we need to keep an eye on is snowpack in the Rockies." Snowpack will determine river flow and impact water available for irrigation in some areas this summer. Colorado’s snowpack is 62% of normal, but Wyoming’s is nearly normal, Umphlett says.

Growers of soft red winter seeded about 9.42 million acres, a 16% increase from last year with North Carolina producers seeding record-high acreage, according to USDA’s Wheat Seedings report. Producers planted 3.27 million acres of white winter wheat, which is a 2% decline from 2012. Planted acreage in Idaho, Oregon and Washington was down. USDA estimates durum wheat seedings in Arizona and California at 170,000 acres, down 31% from last year.

Stocks declining

Wheat stocks, while ample, have been declining. USDA lowered its estimate for wheat ending stocks to 716 million bushels, down from December’s estimate of 754 million bushels, according to USDA’s latest World Agricultural Supply and Demand Estimates (WASDE). The latest stocks-to-use ratio is 29%, down from last year’s 33%.

Global wheat supplies for 2012-13 are projected slightly lower at 176.95 million metric tons, based on lower expected output in Argentina and lower production in Russia, according to USDA. The world stocks-to-use ratio is now 26%, compared with 28 percent for the 2011-12 world wheat crop.

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