Released: May 12, 1998
Volume 98, No. 5

Seeding of the 1998 wheat crop was nearly complete when a blizzard hit in late October. The western part of the State was hardest hit, but the storm supplied some needed moisture. Conditions to that point had been relatively dry and some stands were spotty. The central, south central, and eastern parts of the State had the most acreage unseeded. The condition of the crop was rated 82 percent good to excellent by early November. Most all the crop had emerged by the end of November, on par with the average. Condition had deteriorated to only 77 percent good to excellent, due to lack of moisture in some areas. Relatively mild winter temperatures allowed the crop to pass through the winter with a minimal amount of damage. The crop was breaking dormancy by the first of March with field conditions gener- ally wet. Those wet conditions prevent- ed some top dressing. Topsoil was rated 25 percent surplus and 75 percent adequate at that point. Another blizzard hit the crop about the 10th of the month. Only light freeze damage resulted and the crop was under light disease and insect pressure. By May 1, the crop condition was again rated 78 percent good to excellent. Warmer weather had allowed the crop to progress rapidly and 94 percent of the crop had jointed, well ahead of the 82 percent average. Only 3 percent of the crop was headed, slightly behind the average of 7 percent. Some nitrogen deficiency was beginning to appear, especially where top-dressing was prevented by wet field conditions.

Table 1-- KANSAS WHEAT PRODUCTION, MAY 1, 1998
District	Acres Planted		Acres Harvested			Yield Per Acre		Production
	1997	1998	1997	1998	% of Prev. Yr	199 7	1998	1997	1998	% of Prev. Yr
WINTER WHEAT	- - - - - - - - 1,000 Acres - - - - - - - -				Percent	Bushels		1,000 Bushels		Percent
Northwest	1,185	1,200	1,144	1,141	100	37	36	42,861	41,300	96
West Central	1,310	1,270	1,254	1,200	96	43	37	53,445	44,600	83
Southwest	1,930	1,650	1,843	1,555	84	37	37	68,318	57,900	85
North Central	1,455	1,490	1,420	1,432	101	51	38	71,779	54,700	76
Central	1,705	1,560	1,667	1,490	89	54	38	89,883	56,900	63
South Central	2,585	2,340	2,475	2,224	90	48	36	118,240	80,600	68
Northeast	290	260	279	250	90	51	34	14,158	8,500	60
East Central	310	290	303	285	94	51	36	15,497	10,300	66
Southeast	630	640	615	623	101	52	36	31,819	22,600	71
State	11,400	10,700	11,000	10,200	93	46	37	506,000	377,400	75

The USDA's first estimate of the winter wheat crop was very close to the average of the range of industry pre-release estimates. At 1,706 million bushels, the 1998 winter wheat crop was just 9 million bushels below the average estimate but was 9 percent (177 million bushels) less than last year's record crop. The crop is down due to a combination of lower harvested acres (down 2.6 percent) and a lower yield (down 6.9 percent from last year's record yield of 45.0 bushels).

Given the relatively early stage of growth of the crop in early May, it's not surprising that the May report has a strong bias to underestimate the crop. On average (since 1950), the May crop report underestimates the crop by 3 percent and in two-thirds of the years, the May crop report was too low.

Over the last 10 years, in the first week following the release of the report, the KCBT July wheat futures prices has declined an average of 1 percent from the levels it was at prior to the release of the report (declines occurred in six-out-of-the-last-ten years). In several of those years, the price declines were 3 to 4 percent ($.10-$.13 bushel based on current futures prices).

In addition, there is a strong seasonal tendency for prices to weaken further into June. In the last 34 years, the KCBT July futures contract traded lower in June (relative to its May price) 65 percent of the time.

The USDA's World Board (an in-house group of economists who provide supply:demand projections) pegged total wheat production at 2,356 million bushels, down 6.8 percent. However, they increased their estimate of the size of the beginning stocks by 40 million bushels and have estimated total supply next year at 3,211 million bushels (up 151 million bushels). Despite the growth in total wheat supply, projected gains in domestic use (up 60 million bushels) and exports (up 90 million bushels) will keep ending stocks unchanged. The mid-point of the range of the USDA's forecast for annual average prices is $3.25/bu., down $.15 from the 1997/98 price.

The projected surge in U.S. exports is based on the expectation that world wheat production will decline by 14 million metric tons (slightly more than 2 percent) and that world wheat imports will increase slightly. While it seems reasonable to expect larger U.S. exports next year, as of early May, export sales of new crop U.S.wheat were only 28 million bushels, the smallest in 25 years. On average, about 9 percent of total annual wheat grain exports are booked as of early May, which would mean that nearly 100 million bushels should have been contracted by this date.

Given the current good condition of the winter wheat crop, and the prospect for rain in the previously dry Northern Plains, it appears likely that total U.S. wheat supplies will be up next year. Seasonally, harvest pressure is expected to push KCBT July futures down to the $3.00 level. If export sales do not pick up soon and/or if wheat production estimates rise significantly, futures prices could fall below $3.00.

Wheat producers may want to consider adding to their sales now. If futures fall below $3.00, cash prices in many parts of Kansas will be at or close to local loan rates. This may act to support prices at those levels. Producers may want to plan on "re-purchasing" the wheat they've sold sometime in late June or early July by purchasing in-or-at-the-money-call options on December or March wheat futures.

Winter wheat production is forecast at 1.71 billion bushels, down 9 percent from 1997 (see table 2). Based on May 1 conditions, the U.S. yield is forecast at 41.9 bushels per acre. This is down 3.1 bushels from last year's record high average but, if realized, would still be the second highest U.S. average. Grain area totals 40.7 million acres, down 3 percent from 1997. Hard Red Winter (HRW) and White acreage totals are down about 3 and 4 percent, respectively. Soft Red Winter (SRW) grain area is up slightly.

Early April condition ratings were quite high and at par with 1993. Since then, the ratings have dipped; as of May 3, the percent good or better was 70-higher than any of the last five years except 1993. Comments from some of the Delta states indicate the March freeze will result in more acres cut for hay than normal. Another freeze hit parts of eastern Colorado and western Kansas the morning of April 17; the effect, if any, has not been assessed.

Table 2-- WINTER WHEAT, KANSAS AND SELECTED STATES, MAY 1, 1998
State	Acreage			Yield Per Acre		Production
	Harvested 1997	For Harvest 1998	% of Prev. Yr.	1997	1998	1997	1998	% of Prev. Yr.
	1,000 Acres		Percent	Bushels		1,000 Bushels		Percent
KANSAS	11,000	10,200	93	46.0	37.0	506,000	377,400	75
Texas	4,100	4,000	98	29.0	30.0	118,900	120,000	101
Washington	2,150	2,100	98	67.0	64.0	144,050	134,400	93
Oklahoma	5,400	5,400	100	33.0	32.0	178,200	172,800	97
Colorado	2,850	2,750	96	32.0	36.0	91,200	99,000	109
Nebraska	1,900	1,850	97	37.0	37.0	70,300	68,450	97
Montana	1,450	1,300	90	39.0	34.0	56,550	44,200	78
Missouri	1,040	1,120	108	55.0	45.0	57,200	50,400	88
Illinois	1,150	1,200	104	61.0	54.0	70,150	64,800	92
Oregon	840	790	94	67.0	65.0	56,280	51,350	91
United States	41,813	40,715	97	45.0	41.9	1,882,609	1,705,784	91

PASTURE CONDITION

Kansas pasture condition as of May 4 was 15 percent excellent, 62 percent good, 19 percent fair, and 4 percent poor. Over the State, topsoil moisture was rated 30 percent surplus, 62 percent adequate, and 8 percent short. Stock water supplies are currently rated adequate.

HAY STOCKS

Hay production during 1997 totaled 5.6 million tons, unchanged from the previous year. As of May 1, Kansas hay stocks totaled 889,000 tons, up 6 percent from last year and 13 percent above the level two years ago.

COTTON

Kansas farmers planted 12,000 acres of cotton in 1997 and harvested 10,000 acres. The average yield of 418 pounds of lint resulted in 8,700 480- pound bales, more than double the 4,100 bales produced in 1996.


Ron Sitzman & Deonne McCray, Agricultural Statisticians
Eldon J. Thiessen, State Statistician
Eddie Wells, Deputy State Statistician

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