April 5, 2007

US wheat looking in good form 

Bolstered by expanded acreage and anticipated bountiful yields, the nation's farmers will likely harvest a huge wheat crop this season, amid prices forecast to match the second-highest average on record, a new report says.

Also, more wheat is likely to be fed to animals amid an expanding ethanol industry that has driven corn prices so high that feeders are looking for alternative crops to fatten their livestock.

That has prompted the USDA to forecast the average seasonal wheat price at $4.30 per bushel, matching the average price of wheat during 1996-97. The record average price was hit during the 1995-96 when prices soared to $4.55 per bushel.

Farmers, spurred by high wheat prices last fall, planted 3.5 million more acres of winter wheat than the previous season. And with the return to more normal weather after the drought, all those added acres are expected to produce high yields across the nation.

In Kansas, wheat conditions are the best in the last six to seven years, although not quite at record levels.

When projections of spring-planted wheat are added, the total planted area for wheat is forecast at 60 million acres--2.7 million acres more than last season, the Economic Research Service said. That means the nation's farmers will likely harvest 358 million more wheat bushels this season, or about 2.17 billion bushels of wheat.

That would be more than enough to offset decreases in carry-over supplies that had fallen to the lowest levels in a decade because of the prolonged drought, the agency said.

Much of this year's crop is not expected to be exported because of high US wheat prices and increasing world production. The agency forecast 925 million bushels of wheat will be exported, 50 million more bushels than a year ago.

Feed mills are expected to feed 155 million more bushels of wheat to livestock this year as more corn bushels are diverted to ethanol production. Expanded ethanol production in the United States has raised the price of corn.