Author: J. Mark Welch

A key component of any market outlook for agricultural commodities is the production forecast for the upcoming year. Estimates of crop area and yield are important market drivers. The 2024 March Prospective Plantings report (survey of producers’ acreage intentions for the upcoming season taken in late-February to early March) showed a decline in both wheat and sorghum acres compared to 2023. However, several other factors may come into play in 2024 that significantly impact the final production numbers.

First, final planted acreage numbers can deviate substantially from planting intentions (Table 1). Even in wheat, where the planted acreage number for winter wheat is pretty well known by early March, spring wheat acres account for about a quarter of the U.S. all-wheat planted area. Over the last 10 years, the final planted number for wheat compared to the prospective plantings survey has ranged from +1 million acres (2014) to -1.6 million acres (2022), and sorghum has ranged from +1.2 million (2023) to -500,000 (2016).  

Another factor impacting the production estimate is the percentage of crop planted that is harvested for grain. This is especially important in wheat and sorghum where major production regions are in the Southern Plains, areas prone to significant drought and weather impacts.  Over the last two years of drought, the harvested percentages of wheat and sorghum have been well below average. A return to average harvested percentage levels could result in planted acres being lower but harvested area increasing.

Related to the harvested area question is the yield potential of the upcoming crop. So far in 2024, national winter wheat crop condition ratings are well above last year and well above average(USDA, Crop Progress) . Better crop condition ratings bode well for an increase in harvested percentage as well as overall yield. This is notably the case in Kansas, the top wheat producing state.  The last time we saw wheat ratings this good in Kansas was 2016. That year set a record high wheat yield for Kansas (57 bushels) and the U.S. wheat crop (52.7 bushels).  The harvested percentage of acres planted that year was 88%.    

The 2016 crop season was under the influence of the El Nino weather phenomenon, as is 2024 (Figure 1).  The current El Nino is the second strongest event since the winter of 2015/16.  With current favorable crop condition ratings, wheat production in 2024 could be up significantly compared to 2023 despite a lower planted acres number.  

Interestingly, 2016 was also a record setting year for U.S. grain sorghum (Kansas is the number one producing state). The final yield that year was 77.9 bushels per acre on a harvested percentage of 93%.  

Using the planted acreage number from the Prospective Plantings report, average percent harvested over the last 10 years, and trend line yields, we project production increases for U.S. wheat and sorghum in 2024 despite a decrease in planted area (Table 2).  For wheat, production is projected to be up 120 million bushels (+7%) and sorghum up 75 million bushels (+24%) compared to 2023.

The decline in planted acres was a major headline in media and market reports following the release of the Prospective Plantings report. The final production impact of that number is far from settled. 

Table 1. Acreage (millions) and yield (bushels/acre) for U.S. wheat and sorghum, 2014-2023

	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023
WHEAT
Prospective Plantings	55.8	55.4	49.6	46.1	47.3	45.8	44.7	46.4	47.4	49.9
Final Acreage	56.8	55.0	50.1	46.0	47.8	45.5	44.5	46.7	45.8	49.6
Difference	1.0	(0.4)	0.5	(0.1)	0.5	(0.3)	(0.3)	0.3	(1.6)	(0.3)
Harvested	46.4	47.3	43.9	37.5	39.6	37.4	36.8	37.1	35.5	37.3
Percent Harvested	82%	86%	88%	82%	83%	82%	83%	79%	78%	75%
Average Yield	43.7	43.6	52.7	46.3	47.6	51.7	49.7	44.3	46.5	48.6
SORGHUM
Prospective Plantings	6.7	7.9	7.2	5.8	5.9	5.1	5.8	6.9	6.2	6.0
Final Acreage	7.1	8.5	6.7	5.6	5.7	5.3	5.9	7.3	6.3	7.2
Difference	0.4	0.6	(0.5)	(0.2)	(0.2)	0.2	0.1	0.4	0.1	1.2
Harvested	6.4	7.9	6.2	5.0	5.1	4.7	5.1	6.5	4.6	6.1
Percent Harvested	90%	93%	93%	89%	89%	89%	86%	89%	73%	85%
Average Yield	67.6	76.0	77.9	72.1	72.1	73.0	73.2	69.0	41.1	52.0

Table 2. U.S. wheat and sorghum production (millions of bushels) in 2023 and a projection for 2024

	Wheat				Sorghum
	2023	2024PP	Change		2023	2024PP	Change
Planted	49.6	47.5	(2.1)		7.2	6.4	(0.8)
Harvested	37.3	39.0	1.7		6.1	5.6	(0.5)
Percent Harvested	75%	82%	7%		85%	88%	3%
Yield	48.6	49.6	1.0		52.0	69.8	17.8
Production	1,812	1,932	120		318	393	75

Figure 1. El Nino winters since 2000

---

Resources

NOAA, Climate Prediction Center, ENSO: Recent Evolution, Current Status, and Predictions, April 15, 2024

USDA, NASS Office of the Chief Economist, WASDE April 2024

USDA, NASS, Prospective Plantings, March 28, 2024

USDA, NASS, Quickstats, April 17, 2024

---

Recent reports from USDA provide insight into the supply prospects for the 2024 winter wheat crop. The Winter Wheat and Canola Seedings publication on January 12, 2024, showed U.S. farmers planted 34.425 million acres of winter wheat for 2024, down about 6 percent from the 36.699 million planted for 2023. This is still the second-highest winter wheat seedings number in the last eight years. Texas planted 5.9 million acres compared to 6.4 million last year; Oklahoma planted 4.3 million compared to 4.6 million. Kansas, the top winter wheat producing state in the nation, planted 7.5 million acres for 2024, down from 8.1 million last year. 

Winter wheat crop condition ratings are well above last year, raising prospects for better winter wheat yields and a better harvested-to-planted ratio in 2024 compared to 2023.  The last USDA report available for the U.S. and specific states was November 26. Kansas updated its wheat crop condition ratings on December 31. The USDA has since suspended weekly crop condition rating reports until the first of April.

Over the last three years, the average harvested-to-planted percentage for winter wheat is about 71 percent.  With a trendline yield of about 51 bushels per acre and 34.425 million planted acres, an early estimate of 2024 winter wheat production is 1.246 billion bushels, around last year’s production and a little lower than the 10-year average production. Winter wheat production in 2023 was 1.248 billion bushels. The 10-year average production level is 1.286 billion bushels. A higher expected yield and harvested-to-plated ratio are expected to compensate for this season’s lower acreage. 

References

USDA, NASS Crop Progress, November 27, 2023 and January 2, 2024

USDA, NASS Quickstats, accessed January 17, 2024.

USDA, NASS Small Grains Summary, September 30, 2023

USDA, NASS Winter Wheat and Canola Seedings, January 12, 2024

---

Welch, J. Mark. “2024 Winter Wheat Production Prospects.” Southern Ag Today 4(4.1). January 22, 2024. Permalink

USDA’s supply and demand balance sheet for U.S. corn has a feature not seen in the corn market since the beginning of the 2019 growing season: carryover from the previous crop exceeding 2 billion bushels. That level of beginning stocks has a significant price moderating effect. In inflation adjusted 2023 dollars, the season average farm price has not been higher than $4.33 per bushel in the three years since 2006 during which beginning stocks exceeded 2 billion bushels. 

Figure 1. Corn beginning stocks and that season’s average real cash farm price ($2023)

With a 2024 average yield of 180 bushels per acre (trend line estimate), planted acres could decline from about 95 million in 2023 to just over 87 million in 2024, and the total supply of corn from one season to the next would be little changed. 

Table 1. 2023 U.S. corn supply forecast and 2024 alternative projection

Season	USDA November 2023 Forecast	2024 Alternative Projection	Change
Planted, mil ac	94.9	87.9	-7.0
Harvested, mil ac	87.1	80.3	-6.8
% Harvested	91.8	91.3	-0.5%
Yield, bu/ac	174.9	180	5.1
	Million bushels
Beginning Stocks	1,361	2,156	795
Production	15,234	14,445	-789
Imports	25	25	0
Total Supply	16,621	16,626	5

Of course, supply is only one side of the balance sheet. Lower corn prices could stimulate increased corn use.  But planted acreage above 87 million would also significantly augment the corn supply.  In the recently released long-term projections, USDA projects planted corn acreage in 2024 at 91.0 million, a yield of 181.0 bushels per acre, and ending stocks (beginning stocks for the 2025 growing season) of 2.616 billion bushels, the most since 1988 (USDA, 2023).

We are just closing the bin door on the final bushels of the 2023 corn crop, but it is not too early to evaluate pricing opportunities for the 2024 corn crop given projections (what might happen) and forecasts (what we expect to happen) around acres, yield, and use. 

References

USDA, Office of the Chief Economist, World Agricultural Supply and Demand Estimates, November 9, 2023. USDA. Long-term Agricultural Baseline Projections, November 7, 2023, available online at https://www.usda.gov/oce/commodity-markets/baseline

---

Welch, J. Mark. “Corn Price Prospects When We Start the Year with a 2-Billion-Bushel Carryover.” Southern Ag Today 3(47.1). November 20, 2023. Permalink

World wheat production exceeded world wheat consumption for 7 out of 8 marketing years from the 2013/14 marketing year to 2019/20. The stocks-to-use ratio as measured by days of use on hand at the end of the marketing year increased from a 104-day supply to 146 days on hand over the same period.  Since 2020/21, we have seen four consecutive years of total use greater than production. Days on hand have subsequently fallen back to a 119-day supply.  During this period, Russia invaded Ukraine in February 2022, raising concerns over exportable wheat supplies from the critical Black Sea wheat producing region. 

As world wheat supplies tightened, cash wheat prices doubled from the summer of 2020 to the fall of 2021, from just under $4 per bushel to $8, then to over $12 in the months after the invasion. Prices have since fallen back to levels last seen in the summer of 2021 (the early stages of the 2021/22 marketing year). This price retracement has occurred even though world days of use on hand at the end of the marketing year are lower, and the conflict in Ukraine continues. 

Figure 1. Texas Cash Wheat Prices, weekly

A key factor behind prices moving lower despite tightening world wheat fundamentals is the continued movement of wheat from the Black Sea region. In the marketing year prior to the invasion, Russia and Ukraine exported 56 mmt of wheat, 28% of world wheat exports. Current estimates for the 2023/24 marketing year are for combined exports of 60 mmt, 29% of the world total. 

This export total is a result of record wheat exports from Russia and a 50% reduction in exports from Ukraine. Russia has gone from virtually no wheat exports in the 2000/2001 marketing year to a projected 49 mmt in the 2023/2024 marketing year. (Figure 2)  Export capability comes from a 50% increase in production over the last 10 years. Further, Russia has increased production by 10 million harvested acres since 2013, and increased yields from 33 to 47 bushels per acre. 

Figure 2. Russia Wheat Production, Exports, Consumption, and Ending Stocks

Russian wheat supplies are of increased importance to the world wheat market. Russia’s wheat exports have increased against a backdrop of tightening world wheat fundamentals. Wheat prices have fallen as wheat exports continue from the Black Sea region, even though the supply and demand situation for world wheat is tighter than before the Russian invasion of Ukraine. In the current world wheat supply and demand environment, any substantial limitation or reduction in exportable wheat supplies from Russia (e.g., due to reduced wheat production, export policy, or geopolitical forces) would likely result in a significantly amplified price response. 

References

USDA, Foreign Agricultural Service, Production, Supply, Distribution Database. Accessed October 5, 2023, https://apps.fas.usda.gov/psdonline/app/index.html#/app/home.

USDA, Office of the Chief Economist, World Agricultural Supply and Demand Estimates, September 12, 2023. 

---

Welch, J. Mark. “Russian Wheat Production and World Wheat Market Fundamentals.” Southern Ag Today 3(42.1). October 16, 2023. Permalink

When we talk about wheat production in the south, we often think of the top wheat planting states of Texas and Oklahoma. Yet, in the last two years, with drought plaguing the Southern Plains, wheat production in other southern states has played an important role in the overall supply of U.S. wheat^[1]. In 2022, winter wheat production in the south accounted for 20% of total U.S. winter wheat production. That increased to 23% in 2023.

This relationship was highlighted in USDA’s August Crop Production Agricultural Statistics Board Briefing on August 11, 2023.  Updated yield information for the 2023 winter wheat crop showed record wheat yields in eight states, five of them in the south: Kentucky, Maryland, North Carolina, Tennessee, and Virginia.  

Compared to 2022, U.S. winter wheat production in 2023 is up 124 million bushels with an additional 2.036 million acres harvested. Of these numbers, the south accounts for 55 million bushels (45% of the increase in U.S. production) on an increase in harvested acres of 1.015 million (50% of the increase in U.S. harvested area).  Strong crop insurance prices and favorable futures market offerings supported an increase in U.S. wheat acres in 2023 compared to 2022.  The Risk Management Agency’s (RMA) base insurance contract price for soft winter wheat increased from $7.14 in 2022 to $8.40 in 2023. For hard winter wheat, the price increase was from $7.08 to $8.79 (USDA, RMA, 2023).

Outstanding yields in southern states outside of Texas and Oklahoma drove the production increase in 2023. Production was 139 million bushels, up 24 million bushels from 2022. Harvested acres in these states were up from 1.630 million to 1.845 million acres, an increase of 215,000.  This is a 21% increase in production on a 13% increase in harvested acres.  

Wheat production numbers struggled again in 2023 in Oklahoma and Texas. While harvested acres in Oklahoma were up 100,000 in 2023 compared to 2022, the average yield per acre was down 1.0 bushel to 27.0, the lowest average reported by USDA for wheat states in the August Crop Production report.  Wheat planted acres in Texas increased sharply in 2023 (5.3 million to 6.7 million, the highest in over 30 years) but the area harvested was only 30% of the planted total. In a normal year, about half of the wheat acres planted in Texas are harvested for grain. 

In the last five years, compared to production in Texas and Oklahoma, winter wheat production from Arkansas, Kentucky, Maryland, Mississippi, North Carolina, Tennessee, and Virginia, has increased from about 75 million bushels, just over 40% of that produced in Texas and Oklahoma, to over 130 million bushels, on par with Texas and Oklahoma production (Figure 1 and Figure 2). 

Figure 1. Wheat production in the south: Texas and Oklahoma compared to other southern states (Arkansas, Kentucky, Maryland, Mississippi, North Carolina, Tennessee, and Virginia)

Figure 2.  Wheat production in the south, 2023, million bushels

The south is well suited for wheat production in that the longer growing season in the region allows for planting wheat after traditional spring planted crops like soybeans and then back to spring crops the following year without missing a growing season or disrupting rotations. 

This is not to say that wheat produced in one region of the south can always substitute for the other. Texas and Oklahoma produce primarily hard red winter wheat while soft red winter wheat is the dominant class in the rest of the south.  Each has particular baking and milling characteristics that make it well suited for particular uses and products.  But in terms of overall U.S. wheat production, and the influence that number has on prices, the south as a whole plays an important role. 

Wheat is a crop with a relatively high yield potential in the south. This becomes especially important to the U.S. wheat supply when drought impacts other major producing wheat states.  In addition, wheat in rotation with other crops can aid in controlling weeds, disease, and insects. Wheat can serve as a cover crop to improve soil health and in many areas, can be double cropped for added income potential.  All important issues for southern agriculture.

References

USDA, August Crop Production Agricultural Statistics Board Briefing, August 11, 2023, https://www.nass.usda.gov/Newsroom/Executive_Briefings/2023/08-11-2023.pdf.

USDA, NASS, Crop Production, August 2023, https://downloads.usda.library.cornell.edu/usda-esmis/files/tm70mv177/2227p6419/w3764r31w/crop0823.pdf.

USDA, NASS, Quick Stats, accessed August 25, 2023, https://quickstats.nass.usda.gov/.     

USDA, Risk Management Agency (RMA). Price Discovery, accessed August 31, 2023, https://prodwebnlb.rma.usda.gov/apps/PriceDiscovery/.                 

---

^[1] Southern wheat production includes these states reported by USDA in the August Crop Production report: Arkansas, Kentucky, Maryland, Mississippi, North Carolina, Oklahoma, Tennessee, Texas, and Virginia. 

---

Welch, Mark. “The Importance of Wheat Production in the South.” Southern Ag Today 3(36.1). September 4, 2023. Permalink