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KWA: Kansas wheat acres continue downward trend

Kansas

The U.S. Department of Agriculture National Agricultural Statistics Service reported Jan. 12 that U.S. acres planted to winter wheat for the 2009 harvest will be down a dramatic 9 percent from the 2008 total, to 42.1 million acres. Planted acres in Kansas are down 600,000 from fall 2007 to 9 million acres in fall 2008. The late row crop harvest due to wet weather and lower prices at planting time were two major limiting factors in acres.

"We are now faced with the hard fact that winter wheat acreage in Kansas has decreased 1.4 million acres in the past 3 years," said Dusti Fritz, Kansas Wheat CEO. "Weather, prices and crop rotation are obvious factors, but there are other factors in this trend that cannot be denied."

Specifically, Fritz said wheat continues to lose acres because it lags behind other commodities in adoption of advanced technologies such as biotechnology.

The roller coaster in wheat markets from historical record-high prices just months ago to less than break-even prices at planting time also leave Kansas farmers confused when it comes to cropping decisions.

Record-high prices in marketing year 2007-08 can be attributed to the extraordinary alignment of, dismal wheat harvests in the world's largest wheat-producing countries, high demand and global stocks that had been depleted to 30-year lows. That the U.S. was the only completely open market in this tight supply situation paid dividends with excellent exports. The U.S. market presence overseas through offices of U.S. Wheat Associates in 16 countries provided access to countries that were turned away by Canada and Australia.

However, those high prices also led to the recently completed record global wheat harvest, which pushed prices lower and decreased U.S. exports. The rising value of the U.S. dollar and lower crude oil prices have also depressed commodity prices, which are linked to oil through ethanol.

According to Ian Flagg, U.S. Wheat Associates Market Analyst, global wheat supplies have increased, but are nowhere near comfortable levels.

"Global wheat stocks are down considerably after production deficits in seven of the last ten years. In fact, even though carry-over stocks are projected significantly higher this year, the stocks-to-use ratio is up only slightly from last year's record low and is well below the ten-year average. The current stocks-to-use level provides a very small cushion for marketing year 2009/10 should production problems arise. This leaves wheat prices susceptible to evolving production developments through the planting and harvest cycle, which could result in continued price volatility--and that will affect planting decisions," Flagg said.

Global wheat consumption will no doubt continue to increase. The USDA projects global consumption will increase 6 percent in 2009, with a large part of this as feed wheat to cattle. Food use of wheat is also expected to increase for the foreseeable future.

Kansas Wheat continues to take steps to make Kansas a leader in meeting the increasing demand for wheat in the world. Kansas Wheat, Kansas State University and the University of Kansas have formed a voluntary alliance under the guidance of the Kansas Bio Science Authority to develop plans for a dramatic joint venture, called the Innovation Center for Advanced Plant Design: "Plants for the Heartland."

Expected outcomes for the Center include commercialization of sustainable, drought-tolerant, high yielding new varieties of wheat.

1/19/09
2 Star EK\10-B

Date: 1/13/09



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