Wheat Production Forecast for 2000 Increased Again

August 16, 2000

Total wheat production is forecast at 2,263 million bushels, a 20 million bushel increase from last month. The increase reflects higher yield forecasts for winter wheat and other spring wheat this month. The larger spring wheat output more that offset a modest decline in the production forecast for durum.

Wheat prices have been under significant pressure as favorable yields have boosted production prospects for soft winter wheats and other spring wheat. The price received by farmers in June

1999 averaged $2.50 per bushel, the same as June 1999, and the preliminary mid-month estimate for July is $2.34 per bushel, 11 cents more than the July 1999 price.

The season average farm price is expected to be about the same as the estimated $2.50 per bushel in 1999-2000. The monthly-average prices received by farmers during 2000-01 are expected to follow a normal seasonal pattern, hitting seasonal lows during harvest (June through August), then increasing to reflect carrying charges. In the coming months, the wheat price will not only be influenced by large U.S. and global wheat supplies but also by weather patterns in the Corn Belt states that affect the corn and soybean crops.

Winter wheat production prospects for 2000 increased as higher yield forecasts for soft red winter (SRW) and white winter (WW) more than offset a lower yield forecast for hard red winter (HRW) wheat in Nebraska. The yield projection of 45.0 bushels per acre for winter wheat is 2.8 bushels below the record 47.8 bushels established in 1999.

Projected food use in 2000-01 was increased 5 million bushels from last month following an unexpected increase in the 1999 mill grind estimates released by the Census Bureau Ending stocks are forecast to increase to 962 million bushels, up 15 million from last month and 12 million above last year's stocks.

As of Aug. 14, the average loan deficiency payment paid on wheat was 30.4 cents per bushel, compared with an average of 46.6 cents for the entire 1999-2000 marketing year. This is another

indication that farm prices are somewhat stronger than they were at this time last year. Payments issued to date total $229 million for 730 million bushels or 32% of the 2000 wheat crop.

The entire wheat report is available on the Internet at http://usda.mannlib.cornell.edu/reports/erssor/field/whs-bb/2000/whs0800.asc.