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Source: U.S. Wheat Associates (USW)
Wheat Letter - March 19, 2009

Of the top three crops vying for hectares in the U.S. Midwest and Plains, soybean plantings are most likely to rise this year at the expense of maize (corn) and, in some areas, wheat. That is the emerging picture seen in public and private analyst predictions ahead of the U.S. Department of Agriculture’s (USDA) March 31 Planting Intentions report.

Farm Futures magazine recently surveyed nearly 1,400 U.S. producers via email. The results showed U.S. farmers are “ready to slash corn acres” in favor of soybeans because of low prices and high input costs. Farm Futures Market Analyst Arlan Suderman wrote that risk aversion is driving spring planting decisions.

"Farmers are reluctant to commit large quantities of capital to a crop during times of great economic uncertainty unless the market gives them a sufficient risk premium…,” Suderman said.

Corn and soybeans are interchangeable in the traditional “Corn Belt” where not much wheat is grown (click here to see chart in the online version). However, corn is increasingly competitive with hard red winter (HRW) wheat in the Plains and soybean production is moving north into traditional hard red spring (HRS) growing regions. U.S. wheat planted area is on a long-term downward trend because of higher profit potential in alternative crops and strong participation in the U.S. Conservation Reserve Program. With wheat prices currently running below input costs, that risk premium Suderman referenced does not appear favorable to wheat for 2009/10.  

A separate producer survey by a respected private analyst predicts that compared to the 2008/09 crop, all U.S. wheat planting will be down about 5.5 percent, or about 1.4 million hectares (3.5 million acres). That prediction includes a two percent decline in HRS planted area and a slight increase in durum planted area. Results also showed that producers surveyed intended to plant about five percent less corn and almost seven percent more soybeans.

USDA recently forecasted U.S. winter wheat planted area at just under 23.5 million hectares (58 million acres). That would be an eight percent decline compared to 2008/09 including a steep drop from last year's record soft red winter (SRW) planted area.

As reported in the March 5 edition of Wheat Letter,a late spring is likely in the Northern Plains where a lot of snow still sits on soil that was already saturated before winter hit. That is a big reason why many producers there have not yet purchased fertilizer or seed. If conditions keep them out of the field through April, they are more likely to plant soybeans or pulse crops where they would otherwise plant HRS. The fact that many producers still have HRS in storage would seem only to support a significant drop in spring-planted wheat.
 

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