KANSAS CITY — Among a trove of US Department of Agriculture reports released Jan. 12 was an estimated smaller area planted to winter wheat than in 2023. But US producers may be poised to harvest a larger crop in 2024 after a much better moisture situation improved initial crop conditions and generated ideas of a return to trendline yields in the US Plains. Poor export prospects for US wheat could mean a larger all-wheat carryout for the next two seasons.

The USDA in its Winter Wheat and Canola Seedings report estimated the area planted to winter wheat for harvest in 2024 at 34,425,000 acres, down 2,274,000 acres, or 6%, from 2023. The year-over-year decline alone might seem steep, but a closer look shows 2023 acreage was a spike. The USDA’s estimate of 34.4 million acres is the second largest since 2016.

Acreage was down from last year across all winter wheat classes: hard red winter wheat at 24 million acres, down 5% on expectations for more area planted to row crops such as corn, soybeans, sorghum and cotton in the central and southern Plains; soft red winter wheat at 6.86 million acres, down 13%; and white winter wheat at 3.54 million acres, down 5%.

In hard red winter wheat country, the 2022 and 2023 crops were beset by drought that ate sharply into yields and production. Indications are that the worst drought days are done, at least temporarily. In mid-November, the USDA in its first assessment of the emerged crop in the Plains rated it 47% good to excellent, the best start for the date since 2019. Much of the production area has received beneficial rain since then before snowstorms took over this month, layering a blanket of protection on plants before brutally cold temperatures arrived.

Thus, the acres may be lower, but production could shoot higher, said Bill Lapp, founder and president of Advanced Economic Solutions, Omaha, Neb.

“The 2023 hard red winter wheat crop was a disappointment at 601 million bus,” he said. “With trend yields, normal weather, 2023 would have produced a crop another third larger, around 800 million bus. For 2024, with the acreage we do have, a nice recovery in conditions, expectations for a rebound from two disastrous yield years, a recovery in percent harvested sharply lower levels, especially in Texas and Oklahoma, there are some big benefits to the point where a crop of more than 700 million bus as an early 2024 projection.”

From a production standpoint, it would be the second largest crop since 845 million bus in 2019 (2021 was 750 million bus). But it may be large in comparison to usage, which last year for hard red winter wheat was 669 million bus versus 575 million bus as the USDA’s projection for 2024. With that in mind, balance sheets could show large ending stocks for bread wheat considering export demand for US supplies remains soft. 

Also on Jan. 12, the USDA released the January World Agricultural Supply and Demand report and lowered its forecast for the carryover of all wheat on June 1, 2024, to 648 million bus, down 11 million bus from the December projection but up 78 million bus, or 14%, from 570 million bus in 2023. Carryout for all classes was lowered from December but still was forecast sharply higher than on June 1, 2023. Year-over-year carryover was projected up 23% for hard red winter wheat, up 19% for soft red winter wheat and up 14% for hard red spring wheat.

“US demand has been hurt and we’re losing the battle on exports, which can be seen in the continued large supplies coming out of Russia and Ukraine,” Lapp said. “Russia will continue to dominate wheat exports with adequate to ample supplies and a favorable currency rate, so the US will continue to barely merit a participation medal in the global wheat export game.”

The trade will find the next clues about the 2024 crop from the USDA’s March 28 Prospective Plantings report and the resumption of weekly crop condition updates in April as winter wheat comes out of dormancy. Another benchmark will be contained in the USDA’s initial outlook for the 2024-25 crop marketing year, which will be released during the Agricultural Outlook Forum in February.

“I anticipate USDA will follow the increased carryout in 2023-24 with another increase for 2024-25 for corn, wheat and soybeans,” Lapp said. “We had very tight supplies for three years and now it’s moving closer to full correction.”

In view of the decline of about 80¢ a bu since December, Lapp said Kansas City wheat futures were likely to shift sideways through the first quarter and into the second, with the caveat that funds evening out their record short positions in the market or adverse weather this winter could generate a rebound. Chicago soft wheat futures could take a similar trajectory with the possible risk of a rally if China returns for more US supplies after making major purchases in the fourth quarter.

As for spring wheat, no major jumps or dips were likely until the region thaws and wheat starts moving again, Lapp said.

“You’ve got to be able to move wheat, and weather has not been conducive to that, which has strengthened the Minneapolis basis to some degree, so into the springtime before we see any downside moves in Minneapolis futures,” he said. “We’ve had a big flush in these markets and to those who follow futures, if the news seems all bearish, that’s already baked into the price.”