Released: May 12, 1999
Volume 99, No. 5

Seeding of the 1999 wheat crop was nearly complete when scattered showers fell throughout the State in early November. The heaviest amounts of rain were in the eastern half of the State where flooding occurred in the northeast, south central, and southeast districts. Rainfall ranged from 3 inches in the west to 10 inches in the southeast. Conditions to that point had been relatively dry with some reports of spotty wheat stands. The condition of the crop was rated 73 percent good to excellent by early November. Most of the crop had emerged by the end of November, in line with the average. The wheat condition remained unchanged from 73 percent good to excellent, due to excess moisture in some areas. The relatively mild temperatures allowed the crop to progress ahead of normal throughout the winter with a minimal amount of damage. However, during the latter part of December, the mild temperatures gave way to extreme cold, but did not seem to have a significant impact on the wheat condition. Rain and snow in early March, prevented top-dressing to take place in some areas. Topsoil was rated 8 percent surplus and 63 percent adequate at that point. A late snow storm and colder temperatures swept throughout the State during the 2^nd week of March. Only light freeze damage resulted and the crop remained under light disease and insect pressure. By May 1, the crop condition was rated 79 percent good to excellent. Mild temperatures had allowed the crop progress rapidly and 94 percent of the crop had jointed, well ahead of the 87 percent average. Twelve percent of the crop was headed, well above the average of 6 percent. In a few areas, nitrogen deficiency was beginning to show up in wheat fields.

Table 1-- KANSAS WHEAT PRODUCTION, MAY 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	1,090	100	51	44	55,991	48,500	87
West Central	1,280	1,230	1,180	1,170	99	51	45	60,261	53,200	88
Southwest	1,750	1,590	1,650	1,490	90	51	43	84,231	64,500	77
North Central	1,360	1,360	1,315	1,310	100	55	43	72,938	55,700	76
Central	1,680	1,490	1,559	1,425	91	49	43	77,072	61,000	79
South Central	2,420	2,280	2,289	2,160	94	45	41	101,995	89,000	87
Northeast	240	200	230	190	83	48	43	11,032	8,200	74
East Central	265	230	252	220	87	42	42	10,668	9,300	87
Southeast	555	480	535	445	83	39	43	20,712	19,100	92
State	10,700	10,000	10,100	9,500	94	49	43	494,900	408,500	83

Winter wheat production is forecast at 1.61 billion bushels, down 14 percent from 1998 (see table 2). Based on May 1 conditions, the U.S. yield is forecast at 44.4 bushels per acre. This is down 2.5 bushels below last year's record high. Grain area totals 36.3 million acres, down 9 percent from 1998. If realized, this will be the smallest winter wheat area since 1971. Hard Red Winter (HRW) area is down 8 percent from a year ago, with Kansas, Oklahoma, and Texas accounting for about 1.8 million acres of the HRW drop. Soft Red Winter (SRW) and White wheat took the biggest percentage hit. Both classes are down 12 percent from last year. Good or better condition ratings of winter wheat tracked below 1998 through April; then moved just above last year's first weekend of May.

Table 2-- WINTER WHEAT, KANSAS AND SELECTED STATES, MAY 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	9,500	94	49.0	43.0	494,900	408,500	83
Oklahoma	5,100	4,500	88	39.0	34.0	198,900	153,000	77
Washington	2,100	1,800	86	65.0	64.0	136,500	115,200	84
Texas	3,900	3,400	87	35.0	31.0	136,500	105,400	77
Colorado	2,550	2,400	94	39.0	38.0	99,450	91,200	92
Nebraska	1,800	1,900	106	46.0	40.0	82,800	76,000	92
Illinois	1,200	1,020	85	48.0	52.0	57,600	53,040	92
Missouri	1,250	950	76	46.0	48.0	57,500	45,600	79
Montana	1,250	1,000	80	39.0	40.0	48,750	40,000	82
Oregon	790	640	81	67.0	59.0	52,930	37,760	71
United States	40,126	36,343	91	46.9	44.4	1,880,605	1,614,799	86

PASTURE CONDITION

Kansas pasture condition as of May 3 was 13 percent excellent, 66 percent good, 18 percent fair, 2 percent poor, and 1 percent very poor. Over the State, topsoil moisture was rated 47 percent surplus and 53 percent adequate.

HAY STOCKS

Hay production during 1998 totaled 8.0 million tons, up 17 percent from last year. As of May 1, Kansas hay stocks totaled 1,525,000 tons, up from 889,000 tons last year and 841,000 tons two years ago .

COTTON

Kansas farmers planted 17,000 acres of cotton in 1998 and harvested 16,500 acres. The average yield of 404 pounds of lint resulted in 13,900 480- pound bales, a 60 percent increase over the 8,700 bales produced in 1997

The USDA's first estimate of the winter wheat crop was smaller than the average of the range of industry pre release estimates. At 1,615 million bushels, the 1999 winter wheat crop was 20 million bushels below the average estimate but was 14 percent (266 million bushels) less than last year's crop. The crop is down due to a combination of lower harvested acres (down 9.5 percent) and a lower yield (down 5.3 percent from last year's record yield of 46.9 bushels). Given the relatively early stage of growth of the crop at the beginning of May, it's not surprising that the May report has a strong bias to underestimate the crop. Two-thirds of the time (since 1950), the May crop report underestimated the size of the final crop. On average (including all years since 1950), the May report underestimated the crop by 3 percent. This week, a weighted index of winter wheat crop conditions had a value of 383 (300 = Fair, 400 = Good, 500 = Excellent). That's up 2 points from last year. At this early stage of development, of the three classes of winter wheat, HRW yields have the closest statistical relationship to crop conditions. Based on current crop conditions, HRW yields are projected to be 42.4 bushel, that's only .8 bushels less than last year's record yield but its 3 bushels more than the USDA's May "implied" HRW yield of 39.4.

The projected surge in U.S. exports is based on the expectation that world wheat production will decline by 16 million metric tons (2.6 percent) and that world wheat imports will increase around 9 percent. While it seems reasonable to expect larger U.S. exports next year, as of early May, export sales of new crop U.S. wheat (including an estimate of food aid donations that were to be shipped after June 1) were only 38 million bushels, the third smallest in 26 years. On average, about 10 percent of total annual wheat grain exports are booked as of early May, which would mean that nearly 112 million bushels should have been contracted by this date.

Given the current good condition of the winter wheat crop, and favorable prospects for the Northern Plain's spring wheat crop, it appears likely that final 1999 U.S. wheat production will end up being 50-100 million bushels larger than currently projected. Seasonally, harvest pressure is expected to push KCBT July futures lower. Over the last 11 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-eleven years). In several of those years, the price declines were 3 to 4 percent ($.09-$.12 bushel based on current futures prices).

In addition, there is a strong seasonal tendency for wheat prices to weaken further into June. In the last 35 years, the KCBT July futures contract traded lower in June (relative to its May price) 63 percent of the time (see Table I). In those years in which the contract's June low traded below the May low, the average decline was 4 percent.

If export sales do not pick up soon and/or if wheat production estimates rise significantly, KCBT futures prices could fall to $2.60. Recently, the "spread" between the KCBT's March 2000 and the July 1999 contract was $.34/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.

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

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