By: Jim Peterson
Posted: Jun 28 2024
The share of overall U.S. wheat production amongst wheat classes is shifting in 2024, with the most dramatic shift in soft red winter and hard red winter wheat. The three year trend in supplies of HRW, SRW and HRS are shown in the accompanying chart. HRW will have its largest supply in three years, with HRS likely slightly larger, and SRW notably lower. The HRW and SRW estimates are official USDA data, whereas the HRS is an unofficial projection based on March acreage reports and current crop prospects. Shifts in production share amongst the classes will impact price spreads between the classes, and drive export dynamics and domestic mill demand for the various classes.
Harvest of the U.S. winter wheat crop was estimated to be 40% complete as of June 24, well ahead of the recent 5-year average of 25 percent. Yield reports have generally been better than anticipated in many hard red winter wheat regions, but slightly disappointing in some soft red winter areas, paralleling current USDA estimates.
Official USDA estimates, as of June, have average winter wheat yields at 51.4 bushels per acre, up from 50.6 last year. Across some key production states, average yields are estimated to be in the mid to upper 30’s in Texas and Oklahoma, 40 bushel/acre in Kansas, to the low 50’s in Montana and South Dakota.
Hard red winter production is currently estimated to be 726 million bushels, up by 20% from last year’s 601 million bushels, and nearly 40% from a two years ago. It is not just higher yields that are supporting the higher production estimates, a sharp reduction in abandoned or unharvested acres is also an underlying factor. Planted area for winter wheat in the U.S. fell by nearly 2.6 million acres in 2024, but the current estimate for harvested acres in 2024, is slightly more than one half million acres higher than a year ago. Much of that decrease in abandonment is across HRW areas. In contrast, production of soft red winter wheat is estimated to be down 25% from last year, and more on par with the 2022 crop. Key production states had notable reductions in planted area, and lower yields.
Projections for 2024 HRS supplies could likely grow over the next two months, if favorable moisture patterns continue. Planted area is expected to hold near 2023 levels, but a higher national yield seems likely given the current crop condition ratings. The national crop is rated 71% good to excellent and only 4% poor to very poor, much higher than last years 50% good to excellent and 12% poor to very poor at this time.
Supply dynamics are a key factor in setting price trends early in the marketing year, and an important variable in export and domestic demand competitiveness. The better than expected HRW yields, faster than expected harvest pace, and favorable early conditions for HRS have brought a dramatic shift in price trends in the near term, but the larger supplies are also making the U.S. more competitive for exports, building a better demand base to support prices as harvest pressure eases.
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