Josh Sosland: Wheat plantings picture becoming dicier
April 12, 2010
Accompanied by wheat futures prices beating a steady retreat, recent data from the U.S. Department of Agriculture certainly was viewed as welcome news by bakers. Spring wheat plantings were up from a year ago, grain stocks in March were sharply higher than a year earlier and corn and soybean prospective plantings exceeded expectations.
The data helped futures prices fall sharply after the reports were released. In the case of wheat futures, season’s lows were reached in each contract with the nearby Chicago May future dipping below $4.50.
The recovery of wheat stocks has been remarkable. At 1,352 million bus, supplies on March 1 were the largest in a decade and were nearly double the 709 million bus in 2008. It was in 2008, only two years ago, when throngs of bakers (the Band of Bakers) gathered in Washington to raise awareness about many issues of concern, contributing to record high prices. In the spring of 2008, users genuinely were concerned by the possibility they could run out of flour.
As evidenced by the declining prices and surging stocks, many of the conditions extant two years ago have changed dramatically. Still, what may be lost in the more comfortable supply/demand picture is a feature that has not changed at all — the long-term shift away from wheat plantings.
While projected spring wheat area was up from 2009, the all-wheat forecast of 53.8 million acres was down 9% from last year and 15% from 2008. U.S. wheat area would be the smallest in 40 years and down 39% from the all-time high in 1981-82.
With each passing year, the picture for wheat plantings becomes a little dicier. Price trends and expanding supplies should not diminish bakers’ resolve in their crucial work toward helping restore the competitive position of wheat as a major crop in the United States.