Market Outlook Report: Wheat

by: Chris Zoller, Extension Educator, ANR, Tuscarawas County

The United States Department of Agriculture Economic Research Service (USDA ERS) released its Wheat Outlook on May 16, 2022.  This report provides domestic and international estimates and projections and is available here: https://www.ers.usda.gov/webdocs/outlooks/103927/whs-22e.pdf?v=1249. The outlook is based on the World Agricultural Supply and Demand Estimate (WASDE) released May 12, 2022.  This article will provide a summary of the estimates for domestic supplies, production, and pricing.

Tight Supplies & Record Prices

The season-average price for wheat in the 2022/2023 marketing year is projected to be $10.75 per bushel.  Drought in several wheat producing regions of the U.S. resulted in lower production in the 2021/2022 marketing year leading to tight stocks.  USDA ERS projects an increase in wheat acres for the 2022/2023 marketing year but still expected to be the lowest in 20 years.

Domestic Outlook

The latest Crop Production Report from USDA National Agricultural Statistics Service indicated that, although acres planted to wheat increased, harvested acres are expected to decline by four percent.  Average yield is expected to decline more than two bushels per acre to an average of 47.9 bushels per acre.

Production of Hard Red Winter wheat is expected to be down 21 percent.  Persistent drought in major production regions (Kansas, Texas, and Oklahoma) is to blame for much of the decline.

Soft Red Winter wheat is expected to decline by approximately two percent from the previous year.  While down, the production is still the largest since the 2015/2016 marketing year.

Production of White Winter wheat, grown primarily in the Pacific Northwest, is projected to be up 38 percent from the prior marketing year.  A total of 230 million bushels is expected.

The outlook projects a total of 555 million bushels of Durum and other Spring wheats.  Arizona and California are significant producers of these classes of wheat.

Winter Wheat Yield Forecast & Conditions

Production in Central and Eastern States is expected to be down compared to last year.  See the figure below.

 

The figure below shows the percent of wheat rated good to excellent, as of May 8, 2022.  The largest reductions in yield are from the major Hard Red Winter wheat producing regions, including Kansas, Oklahoma, and Texas.

According to the May 10 Drought Monitor from USDA, 68 percent of the U.S. winter wheat is in areas experiencing drought.

 

Wheat Pricing

The graph below shows pricing for Hard Red Winter and Hard Red Spring wheat from August 2020 to April 2022.  The most recent OSU Extension Enterprise Wheat Budget for 2023 estimates wheat at $10.65 per bushel.

 

Planning for 2023

Russia and Ukraine account for approximately 30 percent of world wheat exports.  Wheat is receiving greater interest because of the uncertainties of harvest and export potential.  The University of Illinois Farmdoc program published a paper recently analyzing a wheat-double-crop-soybeans rotation and found it to be more profitable that corn or soybeans alone.  The analysis is available here: https://farmdocdaily.illinois.edu/2022/05/production-from-double-crop-soybean-rotations.html.

Planting wheat this year may be an option on your farm.  I encourage you to stay informed of the ever-changing geopolitical environment and its potential impacts on your farm management decisions.  Speak with your agronomist, Extension Educator, and other trusted advisors as you develop plans and evaluate options.

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