October 21, 2011

Bad weather to affect US wheat production

US weather patterns suggest that red winter wheat farmers should be ready for another dry season, which could end up halving the grain inventories.

Farmers look set to sow, at 29.5 million acres, only 100,000 acres less with the grain for the 2012 harvest than they did last time despite persistent drought, with crop insurance providing an incentive to maintain area, FCStone grain expert Doug Jackson said.

"They will keep going just in case there is rain at the last minute, and they always have insurance to fall back on," he said.

However, history suggested a continuation of the dearth of rain which has confronted many hard red winter wheat areas, which are concentrated in the South, and many of which have already recorded their driest conditions on record.

"These dry weather patterns can last 10 years. We have only had a few months so far. And now US is in a La Nina, which tends to bring dryness into winter. Growers, who suffered a 14% drop in yields this year, should prepare for a further drop, to 32 bushels per acre," said Jackson.

The yield decline will drag production lower too, to a 10-year low of 672 million bushels.

Even factoring in some decline in use, this decline looked sufficient to drag inventories to 150 million bushels by the end of 2012-13, half those expected at the close of the current marketing year.