K-State: 30% Probability of Short-Yield Scenario in Wheat
The prospects for new-crop wheat are risky, and Kansas State economists project a 30% likelihood of a "short yield" crop scenario versus 65% likelihood for a "trendline yield" crop scenario. There's only a 5% chance yields will exceed historical trendlines, a recent Kansas State newsletter said.
So what does the short-yield scenario look like? KSU's projections define it as 46.1 million harvested acres with a 38.6 bushel per acre average yield. Play those numbers out and production comes in at 1.779 billion bushels, drawing down the stocks-to-use ratio to 21.2%. The economists even spell out minimum harvested acreage scenario that assumes that only 76% of planted acres are harvested (42.9 million acres) that puts ending stocks-to-use at 18.3%.
Under the trendline scenario, total production comes in at 2.148 billion bushels using harvested acreage of 47.5 million acres and a 45.2 bpa yield. The stocks-to-use ratio would be 26.8%.
Informa adjusted its wheat production outlook down 51 million bushels last week to 2.169 billion bushels, which is pretty close to K-State's trendline estimate.
USDA projected a 2.269 billion bushel wheat crop in its April 10 supply and demand report, 100 million bushels higher than Informa. The projected stocks-to-use ratio was 30.3%.
Unseasonably low temperatures have plagued the main winter wheat growing areas while snow cover is delaying spring wheat planting, and stocks for wheat are expected to tighten, especially if production problems arise elsewhere in the world, both Informa and KSU note.
"Given the uncertainties that still exist regarding 2013 wheat production prospects in the U.S. central and Southern Plains for hard red winter wheat, and also for other major world wheat exporters such as Australia, Argentina, and the Black Sea Region countries, U.S. wheat prices in 2013 are likely to continue to remain high through at least the winter and early spring months," the K-State newsletter stated. "Extremely tight U.S. corn supplies through at least late spring-early summer 2013 are also likely to provide cross market support for 2013 wheat prices."