January 9, 2013

US winter wheat's high prices to boost planting

Despite concerns about dry conditions limiting crop production, US winter wheat's high prices caused farmers to boost their plantings to a four-year high.

A Reuters poll of 20 analysts pegged the USDA's upcoming forecast of total US winter wheat plantings at 42.687 million acres, up from 41.324 million a year earlier.

Hard red winter wheat acreage, the most popular wheat class planted in the US, was seen rising to 30.185 million from 29.863 million. Acreage for soft red winter wheat, which is typically planted in the eastern Midwest, was seen rising 919,000 to 9.039 million.

Prices for the benchmark Chicago Board of Trade soft red winter wheat contract averaged US$8.32-7/8 during the third quarter of 2012, the highest ever for the third quarter, the time when farmers are finalising their planting decisions.

The drought gripping key growing areas of Kansas, Texas, Oklahoma and Nebraska did cause farmers to scale back their planned increases to hard red winter wheat acreage.

"Dry conditions on the Plains caused hard red winter wheat growers to cut seedings by 800,000 acres from initial intentions," said Paul Burgener, market analyst with Farm Futures.

US supplies were seen falling slightly from the USDA's previous estimate as recent price declines were seen boosting end-user demand. Ending stocks for the 2012-13 crop year, which ends on May 31, were estimated at 741 million bushels, down from 754 million forecast in the government's December report.

Analysts pegged US wheat stocks as of December 1, 2012, at 1.658 billion bushels compared to 1.663 billion on December 1, 2011 and 2.104 billion on September 1, 2012.

World ending stocks also were seen falling to 174.665 million tonnes from the previous estimate of 176.950 million due to adverse weather in places like Argentina and Australia.