Market Analysis

The combination of a record US wheat yield and a rec- ord world wheat crop has continued to weigh on the world’s bread and flour grain during the last half of 2016. With exchange and cash prices at 2006 levels or lower, US producers have likely decreased their winter wheat fall seedings for the fourth year in a row. Last year’s plantings of 36.14 million acres of winter wheat was the lowest US level of this food grain since 1913 as produc- ers across Plains and Midwest switched to row crops in search of more profitable returns for their efforts.

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This trend likely continued this past fall where US pro- ducers had the alternative of planting another crop. In the Plains, 2017’s hard red seedings are likely to be off an- other 1.386 million acres to 25.2 million with Kansas plantings off 500,000 to 8.0 million acres last fall. Cattle grazing likely helped limit the Southern Plains decline, but low prices likely curtailed last fall’s soft red plantings across the eastern half of the US, too. This variety’s plantings could have been reduced by 700,000 acres to 5.32 million with last fall’s Southeastern dryness also likely contributing this year’s 11.6% drop of this variety’s seedings. This year’s winter white plantings also likely declined, but reduced alternatives in the Pacific North- west probably limited 2017’s slippage to 131,000 acres to 3.4 million in this area of the country.

Overall, last fall’s US winter wheat seedings likely de- clined by 2.217 million to 33.92 million acres (a 6.1% drop). If 2017’s harvested rate retreats to its trend level of 80.7%, this coming year’s harvested area could be just 27.38 million acres. The smallest area combined since the USDA’s current data series begins in 1909. The other amazing statistic has been the trade’s over-estimating of the US initial winter wheat seedings. Only once (2012/13) in the past 28 years has the USDA’s January level been above the trade’s average estimate for this report.

What’s Ahead   

Given the size of the current 2016/17 world wheat crop, the upcoming USDA winter wheat seeding report probably won’t garner much pre-report attention from the trade. However, if this planting level is below 34 million acres, this could set the tone for more eyes on South America’s wheat crop. Hold sales to see if any weather impacts Argentina’s crop size early in 2017.