Wheat YEARBOOK -- SUMMARY March 27, 2003 March 2003, ERS-WHS-2003 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The text of the yearbook will be available electronically about 1 week following this summary release. ----------------------------------------------------------------------------- U.S. 2003/04 Winter Wheat Area Responds to Tight Supplies U.S. farmers boosted winter wheat seedings for 2003 to 44.2 million acres, the largest since 1998. Seedings are up 2.5 million acres from 2002 because of high prices during September and October when most of the winter wheat was planted. However, little change is expected in spring wheat area in 2003. U.S. wheat prices are down from the highs of last fall, so alternative crops are offering competitive returns to spring wheat. U.S. wheat plantings dropped annually from the 1996/97s high of 75.1 million acres through 2001/02. Low returns to wheat encouraged wheat producers to shift to competing crops, especially soybeans and corn. This trend was slightly reversed in 2002/03 as planted area increased 0.8 million acres to 60.4 million acres. However, this small increase in planted area was more than offset as producers abandoned the largest percentage of planted area since 1936 due to the severe drought. Harvested area was the lowest since 1970, and with drought- reduced yields dropped 2002 production to 1,616 million bushels. This is the lowest U.S. wheat production since 1972. Further constraining supplies, imports also are dropping as drought reduced Canada’s exports. Lower domestic production, sharply lower forecast imports from Canada, and lower beginning stocks put projected U.S. wheat supplies for 2002/03 at 2,459 million bushels, the lowest since 1974/75. The reduced supplies sharply limited feeding and altered milling patterns. The reduced availability of hard red spring (HRS) wheat, with smaller domestic production and fewer imports from Canada, encouraged millers to substitute hard red winter wheat for HRS. Overall, forecast food use of wheat grain is slightly higher year-to-year as declining per capita flour use is partially offset by a lower flour-extraction rate than last year. Tightening U.S. stocks and reduced supplies in most of the major exporters boosted U.S. prices significantly. Average farm prices rose to a peak of $4.37 in October, $1.50 above the year-earlier price. Subsequently, world and U.S. prices began to weaken as foreign millers began taking advantage of the increased availability of wheat supplies from countries exporting through the Black Sea and from the European Union (EU). While U.S. prices have dropped from their peaks of last fall, they remain well above EU offers. Thus, U.S. exports are forecast to be 875 million bushels, the lowest since 1971/72. This is the first year since 1958/59 that exports have been lower than food use. Printed copies of the Wheat Yearbook will be available in several weeks. For further information, contact Gary Vocke (202) 694-5285. The full report will also be available on the ERS web site at http://www.ers.usda.gov/briefing/wheat/.