U.S. wheat production in 1996 was estimated at 2.28 billion bushels which is about a 5 percent increase from production levels in 1995 (Table 1). The 1996 U.S. yield was set at 36.3 bushels per acre; close to average for the 1989-95 time period (36.8 bu/ac). Last year, 75.6 million acres were planted and 62.9 million acres were harvested. This was an increase of 6 million acres planted from 1995 and was a reflection of the higher prevailing prices at planting. Additionally, stocks carried into 1996 were below average at 376 million bushels.

Table 1.  U.S. and S.C. Harvested Acres, Yield and Production, 1994 to 1996
          Marketing Years 1/2/
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 Item                 Units            Year          U.S.        So Carolina
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 Acres Harvested      Thous. Ac.       1994         61,700            360
                           "           1995         60,971            280
                           "           1996         62,900            270

 Yield                Bu/Ac            1994          37.6              50
                         "             1995          35.8              32
                         "             1996          36.3              48
                                
 Production           Thous. Bu.       1994        2,320,981         18,000
                          "            1995        2,185,539          8,960
                          "            1996        2,282,000         12,960
                                
   1997 Winter
 Wheat Plantings 3/   Thous. Ac.       1997          48,200           300
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1/  U.S. information from USDA-ERS data;  
2/  S.C. information from USDA-NASS and S.C. Agricultural Statistics Service.
3/  USDA-NASS "Winter Wheat and Rye seedings, 1997", January 10, 1997.

Both domestic utilization and exports are projected to absorb a great deal of this crop (Table 2). On the domestic side, Feed usage is projected to take over 325 million bushels in the 1996-97 market year. Higher domestic demand for wheat for feed use was fueled by attractive prices and availability relative to other feed grains, particularly corn last summer.

Export prospects for U.S. wheat are lower than average, which is to be expected reflecting the high prices as we entered the marketing year. There's nothing like $6.00 wheat prices to encourage marginal producing nations to grow more wheat. None-the-less, global supplies are low and the European Community continues to actually tax exports. Exports are projected at 950 million bushels in 1996-97. This is a decrease from both the 1995 crop year and the recent period average.

Table 2.  U.S. Wheat Supply and Use, 1990-94.1/ 
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  Item/Mkt Year         Units       1994      1995       1996      1997
                                                                   Projected 2/
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  Acres Harvested       Mill Ac      61.8      60.9       62.9       61
  Yield                 Bu/Ac        37.6      35.8       36.3       37
                                
  Carry-In              Mill Bu       568       507        376       435
  Production            Mill Bu     2,321     2,183      2,282     2,257

  U.S. SUPPLY           Mill Bu     2,981     2,757      2,728     2,692 
     Feed Use           Mill Bu       344       152        325
     Food Use           Mill Bu       942       988      1,018    
     Exports            Mill Bu     1,241     1,241        950
  UTILIZATION           Mill Bu     2,475     2,381      2,293     2,400
                                
  U.S. END STOCKS       Mill Bu       507       376        435       292
  U.S. FARM PRICE       $/Bu         $3.45     $4.35      $4.30     $4.00 +?
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1/  US numbers from USDA WAOB, WASDE-321-7 Estimates, December 12, 1996; 
2/  Author's Projection.

With 1996 utilization projected at a large 2.4 billion bushels, ending stocks are projected at a relatively tight 435 million bushels. This a 54 million bushel increase from the 1995 marketing year and is favorable for the 1997 crop.

Weather scares could easily strengthen current 1997 crop prices. The size of the 1997 crop will be the primary market mover as we move from planting into harvest. My guess at the size of the 1997 U.S. crop is that it will fall in the 2.2 to 2.3 billion bushel range. This production level is set assuming the following:

                                
        1 .  U.S. harvested acres at 61 million acres (ma) in 1997.  
             This is based on reduced current plantings of winter 
             wheat of 48.6 MA which was down seven percent from the 
             prior year;                                                 

        2 .  U.S. average yield set at 37 bushels per acre (bu/ac). 
             This is a return to trend yields (1989-95 average was 37
             bushels) and assumes that higher (or lower) than trend
             yields tend to return to trend in subsequent years.

Needless-to-say, with the stocks that we are currently projecting and market conditions as they are, one should expect more global production in 1997. However, based on recent history and current stock levels, current prices appear to be lower than a weather scare market would give us. Current prices might very well be viewed as acceptable for some of the 1997 crop. It might be wise not to pass up this market opportunity for some, say ¬, of next year's crop. But with the current tight stock levels, I'd wait and see what the winter weather scares might bring for the remainder of my production.

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