USDA gave us our first peek at 2025-26 ag production in the United States on Friday, tallying U.S. winter wheat plantings from the fall of 2024 and to be harvested in May-July 2025 for the 2025-26 marketing year. USDA won't attempt to measure corn and soybean plantings until their armchair estimates at the Outlook Forum in late February and then the Planting Intentions report at the end of March.
Let's take a look at some of the key numbers from Friday's Winter Wheat Seedings report and then try to put them into a broader U.S. and global perspective.
The report was bearish for the new crop on the surface, with U.S. winter wheat plantings up 2.2% from a year ago and also roughly 2.2% higher than the average trade guess. This is the second-highest U.S. winter wheat acreage figure since 2016, exceeded only by 2023. By class, USDA put hard red winter (HRW) plantings at 24.0 million acres, with soft red winter (SRW) at 6.44 million and winter white at 3.64 million. Five states increased acreage more than 30% from last year -- Alabama, Georgia, Michigan, South Carolina and Virginia. Maybe Michigan wants to join the SEC? These are all relatively small acreage states, magnifying the percentage changes, and primarily in the south. That makes us suspect double-crop intentions with soybeans. The big dog, Kansas, has about 22% of total U.S. acreage and is down a modest 2.6% from last year. Only South Dakota was down more than 8% year over year, at 8.1%.
For perspective, winter wheat was around 64.5% of U.S. "all wheat" production last year, with spring varieties and durum outside this count. Thus, winter wheat is much of the crop. But as we shift to broader, all-class numbers, we must remember that winter wheat is an early piece but not the only piece that can change based on market signals. It would imply a slightly larger U.S. wheat crop for next year, subject to changes in spring wheat and/or harvested area and average yield.
Friday's WASDE report made only minor changes to the current marketing-year balance sheet for the U.S., increasing projected imports back up to 130 million bushels (mb), and ignoring, for now, any potential tariff friction with Canada, while adding 2 mb to seed use, reflecting the larger plantings. U.S. projected ending stocks are still burdensome at 798 mb versus 696 mb in 2023-24 and 570 mb in 2022-23. That's reflected in the cash average price estimate, which was trimmed to $5.55 for the in-progress marketing year and down from $6.96 and $8.83 in the two prior years. Low prices do cure low prices, with exports seen rising to 850 mb this year from 707 mb a year ago and 762 mb two years back. Exports were 39% of total U.S. disappearance last year, but they are a big swing factor because food and seed use changes very little year over year, and feed use only jumps when corn is scarce and wheat is cheap.
The data presented thus far might have you wondering if we're making a mistake in increasing wheat acres, relying on lower prices to clear the inventory, and thus far not being successful enough at that to tighten ending stocks. Don't despair! The world fundamental numbers are still heading in the right direction.
World wheat ending stocks are projected to be, by the end of the standard USDA marketing year on May 31, the tightest since 2015. The world stocks-to-use ratio would tighten to 25.53% based on Friday's WASDE numbers. It's the June 2025-May 2026 marketing window that the current U.S. winter wheat plantings are trying to hit. Russia, the bane of wheat marketers in most other countries due to its willingness to screw domestic producers and undercut the world market on price, has been hurt by bad weather. Russian and Ukrainian wheat numbers are junky, due to the forcible annexation of part of Ukraine by Russia and the inclusion of some Ukraine production in both Russian production and export numbers. However, USDA is confident enough in the Russians' weather problems to reduce Russian production for 2024-25 to 81.5 million metric tons (mmt) -- no change Friday -- from 91.5 mmt a year ago.
The Russian export figure was trimmed another 1 mmt on Friday to 46 mmt, down from 55.5 mmt the previous year and 49 mmt in the invasion year. Ukraine exports are also dropping, with USDA at 16 mmt on Friday versus 18.58 mmt a year ago and 17.12 mmt two years ago.
What's the bottom line? The nine-year-cycle low in CBT wheat is due in 2025, plus or minus eight- or nine-months statistical deviation. Tightening world stocks-to-use ratios are how you eventually reach that low from a fundamental perspective. Technically, the market is arguing/debating whether the Aug. 27 low at $4.935 could have been the big one arriving a little early, or if a harvest low in 2025 is likely to take it out. Last year had a similar tight stocks by the year-end global setup and rallied from March to the end of May. Those tight stocks aren't yet obvious to most buyers due to the heavy concentration of world wheat production in the Northern Hemisphere. We are still working down that pile.
We see nothing in Friday's USDA numbers to ruin our longer-term optimism but are counting on spring wheat producers in the U.S. and Canada to remain conservative with their plantings and not change the narrative!
Alan Brugler may be reached at alanb@bruglermktg.com
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