Northwest Farm Credit Services and Mike Krueger of The Money Farm recently released their 2017 grain market outlook focusing primarily on winter and spring wheat.

Last year, marked the fourth consecutive world record crop of wheat, driven largely by Australia's record crop. In contrast, in 2016 the wheat crop in the US was far off historical highs and the downward trend in expected to continue in 2017. 

According to the USDA, in 2017 32.7 million acres were planted in winter wheat. This represents the fewest acres planted in winter wheat since the USDA started to keep records in 1919. Winter wheat plantings have been in a steady steep decline since 2013 when between 40 and 45 million acres were planted in winter wheat.

USDA's reported 11.3 million acres planted in spring wheat in 2017. The 2017 figure represents a fraction of what was planted just twenty years ago. In 1997, over 19 million acres were planted in spring wheat. On June 30, 2017, the USDA will release their scheduled revisions to the planted acres previously reported. It is estimated that the revisions will reveal a drop off in acres of spring wheat planted due to reported soy bean seed sales in the northern plains.

In terms of all US wheat production, the big change from 2016 to 2017 is a decrease of 500 million bushels. The bulk of the reduction in production is attributed to the over 4 million acre reduction of winter wheat planted year-over-year. 

For hard spring wheat production, the production for 2016 was 496 million bushels. The implied for 2017, was 430 million bushels. Most of the national spring wheat is grown from Western Washington clear across to Minnesota. The 2017 projected figure represents one of the smallest spring wheat crops since 2001 / 2002. The first official production numbers will be released by the USDA on July 12, 2017. 

Australia, Canada, and Russia are the main competitors to the US domestic wheat crop. In 2016, Australia produced approximately 33 million tons, a record crop by a large margin. Canada produced a strong crop of just over 31 million tons, which does not represent a record in total volume, but was a record yield. World wheat prices continue to be depressed in large part due to Russia's production, which was 73 million tons of wheat in 2016. Ocean freight rates are relatively cheap, which further allows Russia's wheat price to remain low, which brings down rates across the world. 

See the full update here:

This blog was published in conjunction with Pfister Land Company