Wheat grows in field

With the 2020 acreage debate coming into focus, it’s worth remembering that winter wheat bats first. 

With the prevented-planting headaches of 2019, many noted that “Mother Nature bats last.” With the 2020 acreage debate coming into focus, it’s also worth remembering that winter wheat bats first. This week’s post reviews the USDA’s latest 2020 winter wheat acreage estimate and potential impact for corn and soybean acreage.

Earlier this year the U.S. Department of Agriculture estimated U.S. winter-wheat acres at 30.8 million acres. That represents a modest decline in acres from 2018 levels – 355,000 acres fewer. It underpins the broader trend of fewer U.S. wheat acres. Figure 1 shows U.S. winter-wheat acres since 2000. Overall winter-wheat acres as well as all wheat acres have been decreasing. A trend line through the data reveals winter-wheat acres have declined at an average annual rate of 560,000 fewer acres each year. That rate seems small on an annual basis but certainly adds up through 20 years. Those lost winter-wheat acres have of course found their way into alternative crops – namely corn and soybeans.

Figure 2 shows the annual change in winter-wheat acres. The first thing that jumps out is that historically winter-wheat acres have moved significantly. Since 2000 the annual change – as an absolute value – has been more than 5 percent in 12 years. In other words the annual change in wheat acres has been more than 5 percent more or less in 12 out of the past 20 years. In that context the change in 2020 of 1 percent less is rather tame.

Consider wheat through long run

Shown in Figure 3 and Figure 4 is the long-run story for U.S. wheat. Winter-wheat acres since 1909 are shown in Figure 3. Figure 4 shows total wheat acres since 1919. In both cases the story has been a decline since the early 1980s.

Current acreages are at historically smallest levels. Total wheat acres in 2019 were the fewest in 101 years of data. Winter-wheat acres in 2020 will be second-fewest in 112 years; acreage was only less in 1909.

As mentioned earlier the trend on an annual basis can seem small. Because U.S. wheat acres peaked in 1981, a trend line shows the average rate of decline was 858,000 fewer acres each year. The headline in this wheat story has been the stubborn duration of the trend – almost 40 years long. Another way of thinking about the trend is that the pace is equivalent to losing more than a Kansas and Nebraska worth of wheat acreage each decade.

Wrapping it Up

The decline in winter-wheat acres has not occurred in a vacuum. Fewer wheat acres have occurred as additional acres of corn and soybean production are planted.

Thinking about 2020, the winter-wheat report didn’t pack much excitement. On the one hand it’s good news because a large decline in wheat acres – like what occurred from 2015 to 2017 – would have been burdensome on corn and soybean production. On the other hand an increase in winter-wheat acres would have taken some pressure off corn and soybeans in the 2020 acreage debate. Attention will now focus on the spring crop-insurance-price discovery period.