Washington, DC
February 19, 2009
Source:
U.S. Wheat Associates (USW)
Wheat Letter - February 19, 2009
USDA released
its annual update of ten-year
Agricultural
Projections
this month and predicts that corn (maize) continues its reign as
the largest crop in the U.S. Looking ahead to 2018, USDA
expects planted corn area to increase gradually from its current
level of 36 million to 37 million hectares in response to
increased domestic use, with a corresponding decline in planted
area for both wheat and soybeans.
Ethanol production still drives the corn predictions, although
USDA expects the demand pace to slow from recent rapid gains.
The projections reflect only moderate expected increases in
overall gasoline usage in the U.S.
Producers have been able to keep up with such demand for corn
largely because hybrids and biotechnology traits have fueled
remarkable yield increases and allowed corn production to move
West into more arid regions taking planted area away from wheat
(temperate crop land area in the U.S. is relatively constant).
At the same time, producer returns from wheat are falling again.
That reduces wheat’s competitiveness for land relative to other
crops and, USDA said, pushes expected U.S. wheat production
below 25 million hectares over the ten-year period.
At the USW Board Meeting Feb. 9, President Alan Tracy discussed
how wheat futures prices will reflect the balance or imbalance
between demand growth and productivity.
“I wanted to show some indication whether or not we will see
demand-driven prices for commodities by comparing the
productivity growth of the three main temperate food crops
against possible demand,” Tracy says. “The story is mixed. Corn
productivity is in good shape for now, but wheat needs some help
from both biotechnology and higher prices relative to corn. A
return to increased global trade and prosperity would also help
boost prices.”
USDA’s annual projections cover agricultural commodities,
agricultural trade, and aggregate indicators of the sector, such
as farm income and food prices. You can read more on the Web at
http://www.ers.usda.gov/Briefing/Baseline/.
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