For the last 40 years, U.S. farmers have continued to move away from growing wheat. In the early 1980s, U.S. wheat plantings totaled nearly 90 million acres; as of this year, that number has dwindled to only 44 million acres. Much of the acreage losses have occurred in the U.S. Plains where winter wheat has been replaced with corn, soy or cotton.
For the 2021 crop year, farmers are beginning to plant winter wheat with fall insurance deadlines on Sept. 30, suggesting acreage decisions will need to be finalized soon. Can we expect winter wheat plantings to decline again in the coming crop season or is an acreage increase in the cards?
FBN believes there are good odds for higher winter wheat acres this coming year for the following reasons:
The key swing states we are watching are Kansas, Oklahoma, Texas and Colorado. These four states account for about 60 percent of all U.S. winter wheat plantings and also have the ability to move into alternative crops based on relative prices.
Here, we see two key trends that likely spell higher wheat acres in these states. First, cotton prices have come down relative to last year, while wheat prices are about 50 cents a bushel higher this fall versus last. Texas, Oklahoma and, to a lesser extent, Kansas, have migrated away from wheat in favor of cotton in recent years. But as cotton prices have come down and wheat prices have gained, farmers will likely increase wheat plantings. Also, we see corn and soy prices that are mostly on par with last year, so inflated wheat premiums should buy more plantings.
For the four-state region, FBN estimates winter wheat plantings to be up 1.5 million acres from last year. That’s on a total crop size of 17.7 million acres in these four states last year.
Other states also likely see an increase in winter wheat plantings. Although more muted, we would expect another 0.5 million acres from other states. The Southeast in particular could see a fairly hefty increase as cotton prices come down and the ability to double-crop wheat and soybeans makes for an enticing crop play for farmers there.
With new-crop 2021 wheat futures in $5 territory while other crops are declining, FBN expects a surge in winter wheat plantings this fall by 2 million acres. That likely results in higher carryout for 2021 wheat, which should put pressure on prices.
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