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Survey Shows U.S. Durum and Spring Wheat Acres to Drop in 2020

By: WMR-Jim Peterson
Posted: Apr 06 2020

U.S. hard red spring and durum wheat producers intend to plant fewer acres of each in the upcoming season, based on the results of an early March survey, released by USDA on March 31.  Producers indicated they would plant 4 percent fewer durum acres, 1.29 million as compared to 1.34 last year.  The lower trend is driven by a potential 11 percent decline in North Dakota, at just 640,000 acres, down from 720,00 in 2019, and a record low.  Montana producers intend to plant 570,000 acres, up 4 percent from last year, and combined Desert Durum acres in California and Arizona were estimated at 75,000, up from 64,000.

The net decline in U.S. durum acres was a surprise to most of the industry, with many expecting a 25 percent or higher increase in durum plantings, with some estimates expecting more than 2 million acres.  This was based on the fact that milling quality durum bids have been at a $1 to as much as a $1.50 per bushel premium to 14% protein hard red spring wheat for a good part of the year since harvest.  In addition, cropping options are more limited in traditional durum growing regions, and the pulse market is not as strong as previous years, pushing more acres to either spring wheat or durum.    

Factors which likely weighed heavily on the lower than expected interest in durum is the persistent discounts for quality on the 2019 crop, and the lack of strong new crop bids from end-users.  The average producer price for durum sold in February of this year was $4.78 per bushel, only up marginally from $4.72 February 2019, and well below the $6.00 to $6.50 listed for top-end durum.  Hard red spring averaged $4.72 this past February.  New crop bids for milling quality durum are similar to current bids offered, so no real incentive to expand acres, especially considering the quality risk in durum is notably higher than for hard red spring wheat.  

The final durum acres in the U.S. may very well end up higher than the March survey indicates, but it will take a greater price incentive than the market is currently offering.  A factor which could support higher prices in the next few months is the amped up nearby demand for retail pasta due to the worldwide home isolation policies.  The trend in Canadian durum acres in 2020 will also have an impact on future price trends.  Canadian survey results will be released later this month. 

Hard red spring wheat acres in the U.S. are estimated to fall by just 1 percent based on the early March survey.  Total U.S. acres are estimated at 12.6 million, compared to 12.66 last year.  This was slightly higher than many pre-report estimates, although not significantly.  By state, Montana producers are expected to make the sharpest increase, up 400,000 acres to 3.3 million.  South Dakota is expected to expand by 210,000 acres to 850,000.  In 2019, South Dakota acres fell by more than 40 percent due to the late, wet spring.  In both states, less hard red winter wheat seedings last fall, due to wet conditions and delayed harvests, opened acres for spring wheat.   
Minnesota producers intend to plant 7 percent fewer acres at 1.35 million, a second straight year of declines.  North Dakota may see the sharpest decline in plantings at 6.1 million acres, down nearly 10 percent from a year ago.  Much of the decline in North Dakota is likely from eastern parts of the region, where similar to Minnesota, producer disappointment with sharp quality discounts on the 2019 wheat crop, and concerns over a delayed planting season due to wet soils, shifted interest to soybeans.   

In western areas of North Dakota, 2020 hard red spring wheat acres will likely hold steady, or expand slightly.  A more open winter should allow for a timely planting season, and although prices for hard red spring wheat are not incentivizing acres, other crop options offer little price incentive as well.   

The June plantings report will likely see shifts from the March survey, with North Dakota and South Dakota subject to greatest change.  Soybeans will continue to garner strong interest in both states, especially if the planting season gets compressed.  The recent sharp decline in corn prices since early March may shift additional acres to spring wheat in some parts of the region, but a delayed planting season could also shift more acres to prevent plant.   

A stronger price trend in Minneapolis could still drive higher plantings. For much of the marketing year, Minneapolis futures prices have been locked in a trading range of $5 to $5.50 per bushel.  Chicago and Kansas City have had a greater appreciation in price since harvest, although all three markets are below early winter highs.  The COVID-19 worldwide crisis has taken much of the confidence out of markets and created a lot of uncertainty, overriding potential supportive fundamentals in the world market, and recent rally attempts stalled.

Some factors which could provide support in the coming months include hints by Russia to restrict exports to stabilize rising domestic prices, and stockpiling by large import countries to shore up supplies to mitigate risk of the ongoing coronavirus crisis.  An extended period of stay at home policies worldwide would also favor expanded demand for wheat products.  Hopefully fundamentals can establish a stronger footing in the market, and offset the current tepid trends. 

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