Tumbling U.S. Wheat Acres
Strong wheat yields across the U.S. are proving to be burdensome on wheat markets already struggling to deal with large U.S and global inventories. In many areas producers are facing the lowest cash prices they have seen in years. These weak prices have left wheat production in the U.S. with a bleak economic outlook.
In many areas of the Great Plains cash bids are hovering near, and have sometimes below, the $3.00 per bushel barrier. (Here are some – rather depressing – Kansas and Nebraska bids). It has gotten so bad that in some areas of the country cash wheat prices have reached levels that trigger the ability to collect payments from the USDA’s Loan Deficiency Program (LDP) (something few people seriously contemplated when the last farm bill was written).
The situation in the wheat market is symptomatic of many of the issues facing grain producers and we believe that it likely has many broader implications for the entire grain sector. So over the next few months we are going to feature several posts evaluating the situation in wheat production. Internally we’ve been describing it as our “wheat’s woes” analysis. This week’s posts takes a look at trends in U.S. wheat acres. (more…)