January 12, 2007

High prices boost US new-crop wheat acreage

A surge in wheat futures to 10-year highs last fall encouraged US farmers to plant more winter wheat than the previous year, grain analysts said.

The USDA is scheduled to issue today its first acreage estimates of the 2007-08 winter wheat crop, to be harvested in the spring of 2007 and marketed over the following year.

The average estimate among analysts surveyed by Reuters for US winter wheat plantings was 44.1 million acres, up about 9 percent from year-ago seedings of 40.6 million acres.

Farmers seeded the bulk of the winter crop in September and October, when the CBOT wheat futures rose in response to a drawdown in world wheat stocks and a major drought in Australia, the world's no. 3 exporter.

Some US growers forward-sold a portion of their 2007 crop as CBOT wheat futures for July 2007 delivery climbed above US$4.50 a bushel, eventually reaching a contract high of US$5.09 on Nov 27.

In addition to the acreage forecast, the USDA would also update its estimate of old-crop wheat ending stocks for 2006-07, and report on Dec 1 grain stocks.

Analysts expected the government to raise its estimate of 2006-07 US wheat ending stocks to 458 million bushels, up from 438 million in December. The increase reflects poor export demand for US wheat, despite crop shortfalls in the Southern Hemisphere due to drought.

The average trade estimate of US wheat stocks held by farmers and commercial grain firms as of Dec 1, 2006, was 1.315 billion bushels, down from 1.429 billion a year ago.