Source: US Wheat Associates - Wheat Letter

According to a new comprehensive report issued by the USDA Economic Research Service, U.S. wheat plantings are about 30 percent lower than in the early 1980s. Wheat demand fell due to changing domestic consumer preferences and strong competition in export markets, according to ERS. Low financial returns led to the substitution of competing crops for wheat, particularly on the Plains.

The analysts also point out that "wheat area has dropped from its high levels in the early 1980s due, in part, to changes in Government programs," and explain the implications of the Conservation Reserve Program and other program assistance under the various farm acts.

The report points out that the U.S. wheat sector is facing several challenges.

"In the future, attractive total returns (market plus government) for other crops and modest export and domestic demand are expected to limit wheat plantings," the analysts state. "However, low stocks and wheat prices above $3 per bushel will prevent a large decline in acreage."

The Wheat Backgrounder was released on December 29 and is available on the web at www.ers.usda.gov/publications/whs/dec05/whs05K01/whs05K01.pdf.