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Opinion: few winners from wheat-sowing slump

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The gap isn't quite a century. But it still sounds historic - the lowest US winter wheat plantings since 1913, the year that stainless steel was invented and the first crossword published.

The shame is that, for crop price optimists, the collapse in sowings doesn't provide much to celebrate.

It doesn't make wheat look much more attractive, and makes corn and soybeans appear considerably less so.

Small impact

Sure, the drop in sowings - largely a knock-on effect of late corn and soybean harvests tying up fields designated for wheat - will go some way to cutting the huge surplus of the grain.

Assuming 82% of the sown wheat acres are harvested at a yield of 44.3 bushels per acre - the three-year averages on both scores - then the winter-planted crop would produce about 1.35bn bushels.

That's 175m bushels, or 4.8m tonnes, short of production from winter wheat harvested last year.

In the context of a 195m-tonne global wheat mountain, that decline barely registers as a foothill.

The collapse in America's sowings may prove a landmark on the road to a significant change in the market's supply-and-demand dynamics, but it's not a destination in itself.

Farmers' alternative

It's no help at all to corn or soybeans.

Imagine the lost 6.21m winter wheat acres were planted with soybeans. Plug in America's three-year average soybean harvesting rate and yield data, and that area would produce an extra 260 bushels, or 7.1m tonnes.

That's enough to raise world inventories by more than 10% and, other things being equal, lift the global stocks-to-use ratio by more than three percentage points.

For corn, the implications are more dramatic. Planting all the spare acres with corn would produce an extra 970m bushels, or 25m tonnes, of the grain.

If this land were a nation on its own, it would rank as the third-biggest corn-producing country, after the US and Brazil.

Planter's paradox

By surrendering acres, wheat has spread some of its weak supply-and-demand dynamics to its crop peers.

And, as an extra twist, the excessive supply of acreage up for grabs in spring plantings may create an extra pressure on prices - the planter's paradox, as it might be called.

Assuming that farmers are likely to plump for the most profitable option come spring sowing time, then a rise in prices of corn, soybeans or wheat until then should lead investors to punish it, for fear of a jump in planted area.

Farmers achieved near miracles in getting their autumn harvests in despite the abysmal wet and cold. But the abysmal wet and cold may yet have the last laugh.

By Mike Verdin

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