USDA report predicts US area planted to wheat drops

AREA planted to wheat in the United States is predicted to drop compared to last year, a recent international report has shown.

Price lift: Global and local wheat prices lifted following the release of the USDA stocks and acerage report.

REDUCED availability of global feed, coupled with lower spring wheat plantings predictions for the US are boosting grain prices.

The United States Department of Agriculture’s June stocks and acreage report forecast area planted to wheat to reach 17.93 million hectares, with winter wheat area forecast at 12.38 million hectares.

This is down 2 per cent from last year and 1 per cent down from the previous estimate.

Area expected to be planted to other spring wheat for 2020 is predicted to drop 4 per cent from last year and record 4.94 million hectares.

According to Rabobank, wheat prices had a bullish outlook and “should see support at current levels”.

Commonwealth Bank market analyst Tobin Gorey said reductions in US wheat plantings had a modest impact, but the real “shape shifter” on prices was the USDA’s significant reduction of corn plantings.

According to the USDA report, acreage was five million acres (2.02 million hectares) under USDA expectations in March.

The USDA predicts area planted to hit 37.23 million hectares in 2020, up 3 per cent on last year.

Mr Gorey said corn future prices “rallied hard”, after the release of the report, finishing with gains of about 4 per cent.

“The USDA’s latest estimates of US corn plantings were well less than the market’s guess,” he said.

“There was a huge shift in corn crop plantings in the US and people will look to turn to wheat feed as opposed to coarse grains.”

Early last week, before the report’s release, Chicago Board of Trade December ’20 prices were at US489c a bushel, compared with late last week’s price of US504c.

For Australia, ASX East January prices closed last Tuesday at $286 a tonne.

This compared with $291 a tonne late last week.

The Australian dollar also rose in that time, sitting at about US69c, which also contributed to the gain, Mr Gorey said.

“The findings didn’t trigger a large rally – but it did stop them being bad,” he said.

And with extra feed that would be needed globally, Mr Gorey said it could be easier for Australian barley to find another home other than China.

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