Released: June 11, 1999
Volume 99, No. 6

As of June 6, wheat condition is rated 17 percent excellent, 49 percent good, 24 percent fair, 7 percent poor, and 3 percent very poor. Wheat heading is complete, and 66 percent of the acreage has begun to turn color. This is behind of the 74 percent in 1998 but ahead of the average of 49 percent. One percent of the acreage is ripe. Severe hailstorms the beginning of June caused significant damages to the wheat crop, reducing harvested acres by 300,000 from the May 1 estimate.

Table 1-- KANSAS WHEAT PRODUCTION, JUNE 1, 1999
District	Acres Planted		Acres Harvested			Yield Per Acre		Production
	1998	1999	1998	1999	% of Prev. Yr	1998	1999	1998	1999	% of Prev. Yr
WINTER WHEAT	- - - - - - - - 1,000 Acres - - - - - - - -				Percent	Bushels		1,000 Bushels		Percent
Northwest	1,150	1,140	1,090	1,070	98	51	44	55,991	47,600	85
West Central	1,280	1,230	1,180	1,150	97	51	43	60,261	49,800	83
Southwest	1,750	1,590	1,650	1,470	89	51	43	84,231	63,900	76
North Central	1,360	1,360	1,315	1,300	99	55	43	72,938	56,500	77
Central	1,680	1,490	1,559	1,320	85	49	43	77,072	57,400	74
South Central	2,420	2,280	2,289	2,040	89	45	42	101,995	85,000	83
Northeast	240	200	230	185	80	48	41	11,032	7,600	69
East Central	265	230	252	220	87	42	40	10,668	8,900	83
Southeast	555	480	535	445	83	39	42	20,712	18,900	91
State	10,700	10,000	10,100	9,200	91	49	43	494,900	395,600	80

Some industry analysts expect that once harvest progresses further (only five percent had been harvested as of June 6) that winter wheat yields (and production) will increase from current estimates for both Hard Red Winter and Soft Red Winter but decline for Soft White Winter. The June report has a slight bias to underestimate the crop. Fifty-five percent of the time (since 1950), the June crop report underestimated the size of the final crop. On average (including all years since 1950), the June report underestimated the crop by 2.4 percent.

The USDA's World Board (an in-house group of economists who provide supply:demand projections) lowered their total wheat production to 2,242 million bushels, down 3 million bushels from their May projection, and down 12 percent from last year. Other than the slight change in production (and a commensurate change in ending stocks), the World Board left all the other components of their supply:demand projection unchanged. The mid-point of the range of the USDA's forecast for annual average prices remained at $2.85/bushel, up $.20 from the 1998/99 price.

Given the slow pace of export sales, it is somewhat surprising that the USDA left their projection for wheat exports unchanged at 1,150 million bushels (up 100 million bushels from last year). As of the beginning of June (June 3), export commitments were only 140 million bushels. That's up some 13 million bushels from last year but only because of an estimated carryover of 13 million bushels of food aid wheat that was not shipped last year. Even with the extra food aid business, total export commitments are the second lowest on record for this date. On average, about 20 percent of total annual wheat grain exports are booked as of early June, which would mean that nearly 225 million bushels should have been contracted by this date.

In addition to concerns about recent heavy rains in the Southern and Central Plains, much attention has been focused on delays in planting the spring wheat crop and excessive soil moisture. However, the condition for the spring wheat crop is above last year's and is also slightly above average for this time of year. Given the current good condition of the winter wheat crop, and assuming no significant worsening in the condition of the Northern Plain's spring wheat crop, it appears likely that final 1999 U.S. wheat production will be unchanged to up slightly from current projections.

Seasonally, harvest pressure is expected to push KCBT July futures lower. In the last two weeks, however, July futures have rallied nearly $.25/bushel off lows set in late May. Assuming that relatively "normal" conditions will prevail during winter wheat harvest, and considering the low level of export demand, it seems likely that wheat futures (and cash prices) will move lower and could set new lows over the next four-to-six weeks. KCBT futures prices could fall to $2.55 as a seasonal low sometime between early July to early September.

Recently, the "spread" between the KCBT's March 2000 and the July 1999 contract was $.36/bushel. When the spread is measured as a percent of the "full cost of carry" this year's spread is the largest since 1981. Wheat producers, particularly those with on-farm storage available, may want to consider a "storage hedge" this year by selling the March 2000 contract and storing wheat till next February. In addition to locking in the favorable futures spread, a storage hedge may also capture an improvement in the basis after harvest.

Winter wheat production is forecast at 1.61 billion bushels, down fractionally from May 1 and down 14 percent from 1998 (see table 2). Based on June 1 conditions, the U.S. yield is forecast at 44.7 bushels per acre, up 0.3 bushel from the last forecast. Grain area totals 36.0 million acres, down 1 percent from May 1. Hard Red Winter (HRW) production is down 1 percent from last month to 981 million bushels. White Winter production is down 2 percent from last month. Soft Red (SRW) is up 2 percent from the last forecast and now totals 419 million bushels.

Forecasted head counts from the Objective Yield surveys in the six Hard Red Winter states (Colorado, Kansas, Montana, Nebraska, Oklahoma, and Texas) are similar to last year, but with low average weights forecast. Colorado's crop is in mostly good or better condition; hail losses have been normal. The May 16^th hail storm affected all or parts of 15 counties in Kansas, with damage varying widely. North central Montana is dry. May precipitation has improved conditions in Nebraska. The Texas harvest had moved into the Low Plains by the end of May and was winding down in the Blacklands and central areas.

Table 2-- WINTER WHEAT, KANSAS AND SELECTED STATES, JUNE 1, 1999
State	Acreage			Yield Per Acre		Production
	Harvested 1998	For Harvest 1999	% of Prev. Yr.	1998	1999	1998	1999	% of Prev. Yr.
	1,000 Acres		Percent	Bushels		1,000 Bushels		Percent
KANSAS	10,100	9,200	91	49	43	494,900	395,600	80
Oklahoma	5,100	4,500	88	39	33	198,900	148,500	75
Texas	3,900	3,400	87	35	33	136,500	112,200	82
Washington	2,100	1,800	86	65	62	136,500	111,600	82
Colorado	2,550	2,400	94	39	37	99,450	88,800	89
Nebraska	1,800	1,900	106	46	42	82,800	79,800	96
Illinois	1,200	1,020	85	48	55	57,600	56,100	97
Missouri	1,250	950	76	46	49	57,500	46,550	81
Montana	1,250	1,000	80	39	40	48,750	40,000	82
Oregon	790	640	81	67	58	52,930	37,120	70
United States	40,126	36,043	90	46.9	44.7	1,880,605	1,611,599	86

Doug Hartwig & Deonne McCray, Agricultural Statisticians
Eldon J. Thiessen, State Statistician
Eddie Wells, Deputy State Statistician

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