As US wheat growers, millers, and traders await the news on how the wheat crop fared from the winter weather of the past two weeks, there is great uncertainty about the potential for having diminished crops in successive years. With heads beginning to emerge in the midst of February-like weather, Extension crop specialists were warning producers to anticipate cutbacks on yields. While the damage to the wheat crop will not be fully known until harvest, let’s pause for a quick refresher on wheat supply and demand and get a better handle on the impact from the weather.

USDA economists Gary Vocke and Edward Allen have authored the latest wheat outlook, entitled, Rising U.S. Utilization Drops Ending Stocks. They say the total wheat supply for the current marketing year is right at 2.5 billion bushels, and because utilization has climbed to 2.077 billion bushels ending stocks will be declining once again. The higher consumption was attributed to both domestic use and foreign demand. Projected total ending stocks are down 50 million bushels from last month to 422 million bushels, 149 million bushels below 2005/06.

The 2006 crop, reduced by fewer acres and fewer rains, will not contribute much to the total supply, should the 2007 crop also be reduced from the weather. However the acres devoted to the 2007 crop will be 60.3 million, up 3.0 million or 5% from 2006, according to the USDA’s March 30 acreage and planting intentions report:
1) 2007 winter wheat is forecast at 44.5 million acres, 10% above last year.
2) Growers intend to plant 13.8 million acres this year of spring wheat, down 7% from 2006.
3) Area seeded to durum wheat is expected to total 2.0 million acres, up 6% from 2006. Durum planted area in 2006 was the lowest since 1961.
4) Soft white wheat planted area is expected to be 3.8 million acres for 2007, up from 3.7 million acres in 2006. Hard white wheat planted area is expected to be 0.7 million acres for 2007, up from 0.6 million acres in 2006.

But how much of the crop was vulnerable to the wintry weather of the past two weeks. Going into April, the southern wheat was heading out, and warm March temperatures had brought Great Plains wheat out of dormancy. “The Weekly Weather and Crop Bulletin from NASS reported that 6% of the winter wheat crop had advanced to the heading stage, slightly ahead of the 4% reported last year and the 3% average. Heading was well-underway in the southern Great Plains, where the crops in Texas and Oklahoma stood at 16 and 13% headed, respectively. While not yet reaching the heading stage, the crop in Kansas was progressing well-ahead of normal, leaving it vulnerable to the week's sub-freezing temperatures. The effects of the cold snap over much of the eastern two-thirds of the country were reflected in a slight decline in winter wheat condition ratings. Still, 64% of the crop was rated in good to excellent condition, compared with 71% last week and 41% last year.” To gauge crop deterioration, watch for the current week’s USDA Weather and Crop Bulletin after 3 p.m. CDT Monday.

Just as livestock producers saw per capita meat consumption begin to level off after the Atkins diet fell out of favor, flour millers say per capita consumption is falling due to dietary trends toward fewer carbohydrates. “Per capita wheat-flour use for calendar year 2006 is estimated at 133.5 pounds, down 0.6 pounds from a year earlier and down 12.8 pounds from the recent high in 2000.”

Internationally, wheat production is up, helped by record crops in Ethiopia, Morocco, and Mexico. While 2006-07 global production should reach 594.5 million tons, global consumption is forecast at 621 million tons. The shortfall will be covered by surplus stocks, which will be more than 120 million tons. The US share of the world trade will be in the form of 900 million bushels of exported wheat, which exceeded expectations due to relatively high prices. However prices did soften during March and sales increased.

The USDA economists say, “The projected range for the 2006/07 farm price is unchanged at $4.20 to $4.30 per bushel. Producers have marketed most of their 2006 production limiting the effect of further price movements on the weighted season-average farm price.”

Summary:
Last year’s drought shortened wheat crop may be followed by this year’s freeze shortened crop. The impact of the summer-like March and February-like April remains to be seen on the US wheat crop. Ending stocks continue to drop as domestic demand rises along with exports, which increased in March when prices softened. The new crop will have plenty of acreage, reversing a long term downward trend, but the yield and crop quality are unanswered questions.