07-05-17 Rabobank: Wh(e)at’s Going On?

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Wh(e)at’s Going On?

St. Louis, Mo. (July 5, 2017) – U.S. wheat acres have declined almost yearly over the last 35 years, and in the current season, they have hit the lowest point in more than 100 years. In a new report from the RaboResearch Food & Agribusiness group, Grains and Oilseeds Analyst, Stephen Nicholson takes a look at the declining wheat acreage and the potential effects over the next few growing seasons.

The report, “Wh(e)at’s Going On?,” finds the decreased number of acres being planted may begin causing a domino effect down the supply chain. Fewer acres leads to less supply, which leads to increased imports that raise the price of the raw goods. The result is, in the end, a more expensive consumer good.

“The largest actual percentage decline in U.S. wheat acres has been in winter wheat acres, primarily hard red winter,” explains RaboResearch Food & Agribusiness, Grains and Oilseeds Analyst Stephen Nicholson. “This is of particular concern to the baking industry, as most bread flours are milled from hard red winter wheat.”

The contraction of the wheat  acres intensifies the impact of unexpected yield shortfall.  Due to the lower number of HRW acres and a higher probability of production and/or quality issues, both hard red wheat prices and spreads between U.S. wheat classes are likely to be wider and more volatile in the future.

About Rabobank International RaboResearch Food & Agribusiness

Rabobank International RaboResearch Food & Agribusiness is a global team of more than 80 analysts who monitor and evaluate global market events that affect agriculture worldwide. This international team works to collect key insights into commodity markets; conduct in-depth analysis of the factors that drive sector success (or failure); and examine the megatrends that ultimately influence clients’ business strategy. These analysts are internationally respected experts in sectors from protein to produce, inputs to oilseeds, and their knowledge is shared with Rabobank customers.