Released: July 12, 2000
Volume 00, No. 6

Wheat production in Kansas is forecast at 362.7 million bushels, according to Kansas Agricultural Statistics Service (see table 1 for estimates by district). The current forecast is down 6 percent from June 1, and 16 percent below last year's production. Harvested acres are expected to total 9.3 million, up 100,000 acres from June 1 and from the 9.2 million harvested in 1999. Yield is expected to average 39.0 bushels per acre, down 3 bushels from the June 1 forecast and down 8 bushels from last year's yield of 47.0. As of July 2, wheat harvest was 94 percent complete, well ahead of both 1999 and the average.

Kansas growers planted 19.5 million acres to the four major crops (wheat, sorghum, corn, and soybeans), down 1 percent from 1999. Wheat seeded last fall totaled 9.8 million acres, unchanged from the previous forecast but down 2 percent (200,000 acres) from last year.

Sorghum acreage to be planted, at 3.4 million acres, is down 6 percent from last year. Kansas still ranks first in the nation in sorghum acreage. The acreage intended for harvest as grain, at 3.2 million acres, is also down 6 percent from last year.

Corn planted acreage, at 3.4 million acres, is 8 percent above last year's planted acres. Farmers planted 33 percent of their corn acreage with varieties developed using biotechnology. Twenty-five percent of the acreage were planted with insect resistant only varieties containing bacillus thuringiensis (Bt). Seven percent of the acreage with herbicide resistant varieties developed using biotechnology. Stacked gene varieties, those containing both insect and herbicide resistance, were planted on 1 percent of the corn acreage. Acreage expected to be harvested for grain is 3.25 million acres, up 9 percent from last year.

Soybean plantings are expected to total 2.90 million acres, 2 percent above a year ago and the largest planted acreage of soybeans in Kansas history. Producers planted 66 percent of the soybean acreage to herbicide resistant varieties in 2000. Expected acreage for harvest, at 2.85 million acres, is 2 percent above last year and the largest harvested acreage for soybeans in Kansas history, if realized.

Oats planted in 2000, at 110,000 acres, is 8 percent below last year. Oats expected to be harvested for grain, at 50,000 acres, is down 20,000 acres from the previous year. Barley planted acreage, at 8,000 acres, decreased 8,000 acres from last year. Expected acreage for harvest, at 7,000 acres, is down 6,000 acres from last year. Sunflowers planted are expected to total 290,000 acres, up 10,000 acres from a year ago. Of the total sunflower acres, 270,000 are planted to oil type varieties and 20,000 to non-oil varieties. Acreage for harvest, at 275,000, is up 3 percent from last year. Hay acreage to be harvested is expected to total 2.80 million acres, up 3 percent from last year. Of the total hay acreage, 850,000 acres are planted to alfalfa, unchanged from last year. Acreage of dry beans planted, at 18,000 acres, is down 4,000 acres from last year. Harvested acreage is forecast at 17,000 acres. Cotton acreage is estimated at 40,000 acres in 2000, up 7,000 acres from last year.

Table 1-- KANSAS WHEAT PRODUCTION, JULY 1, 2000
District	Acres Planted		Acres Harvested			Yield Per Acre		Production
	1999	2000	1999	2000	% of Prev. Yr	1999	2000	1999	2000	% of Prev. Yr
WINTER WHEAT	- - - - - - - - 1,000 Acres - - - - - - - -				Percent	Bushels		1,000 Bushels		Percent
Northwest	1,100	1,090	1,025	1,035	101	47	35	48,569	36,500	75
West Central	1,217	1,200	1,075	1,155	107	46	36	49,773	41,400	83
Southwest	1,635	1,600	1,470	1,500	102	54	37	79,380	55,900	70
North Central	1,344	1,340	1,250	1,255	100	49	39	60,960	49,500	81
Central	1,590	1,530	1,436	1,460	102	46	42	66,364	62,000	93
South Central	2,384	2,322	2,254	2,210	98	45	39	102,332	87,200	85
Northeast	174	170	170	160	94	44	48	7,562	7,700	102
East Central	157	157	150	150	100	35	40	5,250	6,000	114
Southeast	399	391	370	375	101	33	44	12,210	16,500	135
State	10,000	9,800	9,200	9,300	101	47	39	432,400	362,700	84

Table 2-- CROP PRODUCTION, JULY 1, 1999-2000
Crop	Planted	Harvested		Yield Per Acre		Production
	2000	1999	2000	1999	2000	1999	2000
	- - - - 1,000 Acres - - - -			Bushels		1,000 Bushels
KANSAS
Winter Wheat	9,800	9,200	9,300	47	39	432,400	362,700
Oats	110	70	50	47	44	3,290	2,200
UNITED STATES
All Wheat	62,946	53,909	54,445	42 .7	41 .2	2,302,443	2,242,589
Winter Wheat	43,349	35,572	35,401	47 .8	44 .9	1,699,989	1,588,376
Oats	4,472	2,453	2,472	59 .6	61 .2	146,218	151,380

Winter wheat production is forecast at 1.59 billion bushels. This is down 2 percent from June 1, and down 7 percent from 1999. The U.S. yield is forecast at 44.9 bushels per acre, down 1.8 bushels per acre from June 1. Hard Red Winter Wheat, at 887 million bushels, is down from a month ago by 6 percent. White Winter production is up for the second consecutive month, and now totals 235 million bushels. Soft Red Winter is up 4 percent from the last forecast, at 467 million bushels.

Table 3-- CORN, SORGHUM, AND SOYBEANS, KANSAS, BY DISTRICTS, 1999-2000
District	Corn Planted			Sorghum Planted			Soybeans Planted
	1999	2000	% of Prev. Yr	1999	2000	% of Prev. Yr	1999	2000	% of Prev. Yr
	1,000 Acres		%	1,000 Acres		%	1,000 Acres		%
Northwest	559	566	101	190	181	95	36	44	122
West Central	296	311	105	375	315	84	23	30	130
Southwest	921	983	107	611	593	97	73	102	140
North Central	240	268	112	567	556	98	286	268	94
Central	102	132	129	580	539	93	181	221	122
South Central	332	354	107	572	575	101	282	305	108
Northeast	395	382	97	215	196	91	610	623	102
East Central	210	235	112	185	136	74	283	633	93
Southeast	95	169	178	305	309	101	676	674	100
State	3,150	3,400	108	3,600	3,400	94	2,850	2,900	102

percent from 1999, while all other hay acreage is estimated at 38.4 million acres, 2 percent below last year. Sunflower planted area is estimated at 2.87 million acres, down 19 percent from last year. Harvested area is estimated at 2.78 million acres, down 19 percent. Oil type varieties comprised 2.36 million acres this year, 14 percent below 1999. Non-oil type varieties were planted on 506,000 acres, down 36 percent from one year ago. Dry bean planted acreage is estimated at 1.77 million acres this year, down 13 percent from last year and 12 percent below 1998.

Table 4-- CROP ACREAGE, 1999- 2000
Crop	Kansas				United States
	Planted		Harvested		Planted		Harvested
	1999	2000	1999	2000	1999	2000	1999	2000
	- - - - - - - - - - - - - - - - - - 1,000 Acres - - - - - - - - - - - - - - - - - -
Corn 1/	3,150	3,400	2,980	3,250	77,431	79,579	70,537	73,088
Sorghum 1/	3,600	3,400	3,400	3,200	9,288	8,805	8,544	8,110
Soybeans	2,850	2,900	2,800	2,850	73,780	74,501	72,476	73,474
Oats	120	110	70	50	4,670	4,472	2,453	2,472
Barley	16	8	13	7	5,223	5,702	4,758	5,235
Rye	-	-	-	-	1,582	1,327	383	309
Dry Edible	22 .0	18 .0	20 .9	17 .0	2,023 .0	1,767 .0	1,877 .0	1,652 .5
Sunflowers	280	290	267	275	3,553	2,866	3,441	2,775
All Hay	-	-	2,700	2,800	-	-	63,160	62,181
Alfalfa	-	-	850	850	-	-	23,985	23,767
Other Hay	-	-	1,850	1,950	-	-	39,175	38,414
Cotton	33 .0	40 .0	28 .0	2/	14,873 .5	15,552 .0	13,424 .9	2/

1/ Harvested area is for grain. 2/ No estimate currently available.

Kansas wheat stocks in all positions total 168.9 million bushels on June 1, 14 percent above last June. Wheat stored at off-farm locations (mills, elevators, warehouses, and processors) totaled 161.9 million bushels, which accounts for 96 percent of the total grain stocks. Wheat stocks in off-farm positions are at their highest level since June 1987.

Sorghum grain in all positions total 52.2 million bushels, 4 percent above last year's level. Off-farm stocks accounted for 39.2 million bushels and on-farm stocks for 13.0 million bushels.

Kansas corn stocks in all locations, at 107.1 million bushels, are 15 percent higher than last June. Off-farm stocks are 74.1 million bushels, which account for 71 percent of the total corn stocks. On-farm stocks at 33.0 million bushels, are down 2.0 million bushels from last June.

Off-farm oat stocks are 624,000 bushels, up 25 percent from last June.

Kansas soybeans in all locations total 26.1 million bushels, a 14 percent increase from June 1999. Off-farm stocks, at 19.1 million bushels, are up 25 percent from last year and account for 73 percent of the total soybean stocks. On-farm stocks total 7.0 million bushels, down 500,000 bushels from the previous year's stocks.

Table 5-- STOCKS OF GRAIN - JUNE 1, 2000, WITH COMPARISONS
Grain	Position	Kansas			United States
		June 1, 1999	March 1, 2000	June 1, 2000	June 1, 1999	March 1, 2000	June 1, 2000
		1,000 Bushels
All Wheat	On-Farms	10,000	25,000	7,000	277,710	423,180	226,780
	Off-Farms 1/	138,561	205,645	161,899	668,208	992,115	723,293
	TOTAL	148,561	230,645	168,899	945,918	1,415,295	950,073
Sorghum Grain	On-Farms	12,000	30,000	13,000	27,400	51,700	27,300
	Off-Farms 1/	38,377	73,309	39,160	88,680	173,932	99,682
	TOTAL	50,377	103,309	52,160	116,080	225,632	126,982
Corn	On-Farms	32,000	59,000	33,000	2,257,000	3,300,000	2,029,800
	Off-Farms 1/	61,446	123,755	74,059	1,359,225	2,301,958	1,557,112
	TOTAL	93,446	182,755	107,059	3,616,225	5,601,958	3,586,912
Oats	On-Farms	*	*	*	40,700	53,900	36,000
	Off-Farms 1/	498	613	624	40,678	48,500	40,027
	TOTAL	*	*	*	81,378	102,400	76,027
Barley	On-Farms	*	*	*	52,000	59,300	25,400
	Off-Farms 1/	30	*	25	89,653	110,917	86,326
	TOTAL	*	*	*	141,653	170,217	111,726
Soybeans	On-Farms	7,500	15,000	7,000	458,000	730,000	370,000
	Off-Farms 1/	15,294	29,496	19,054	390,573	666,233	404,996
	TOTAL	22,794	44,496	26,054	848,573	1,396,233	774,996
1/ Includes stocks at mills, elevators, warehouses, terminals, & processors. * Data not published to avoid disclosure of individual operations.

Doug Hartwig and Quentin Wearne, Agricultural Statisticians

Many of the figures in the USDA's July wheat crop estimate were larger than expected. At 1,588 million bushels, the winter wheat figure was 21 million bushels above the average of the trade's pre-release guesstimates but 2 percent below the June figure. While 2 percent may seem like a small reduction, on average, there is a 2 percent increase in winter wheat production between the July and the June reports.

Hard Red Winter (HRW) production, pegged by USDA at 887 million bushels, was down 6 percent from the June estimate and 28 million bushels (3 percent) smaller than the trade's average forecast. This is the fifth year in a row that the size of the HRW crop has surprised the market. In 1996 the July HRW crop estimate was 3 percent larger than trade estimates. In 1997, the report was 6 percent larger; in 1998 the HRW crop estimate was 11 percent larger than trade expectations; and last year, the HRW crop was two percent larger than expectations. The USDA's history of by-class winter wheat estimates (starting as of the May estimate) goes back to 1978. On average, the size of the HRW crop increases by 2 percent between the July:June reports.

In part, the winter wheat crop was larger than expected because of a jump in the SRW crop. Soft Red Winter (SRW) production was posted at 467 million bushels, up 4 percent from the June estimate and 17 million bushels more than expectations. Soft White Winter (SWW) production was estimated at 235 million bushels, up 3 percent from the June estimate but in-line with industry expectations.

The "flip side" of the today's wheat report was the "as-expected" production estimate for spring wheat. The USDA's first estimate of "other" spring wheat production was 526 million bushels, 23 million bushels more than last year's crop but just 2 million bushels shy of the average of the trade's pre-release estimates. Since 1950, the final annual spring wheat crop report has been larger than the July crop report estimate 53 percent of the time. On average (in all years), the annual crop was 2.6 percent larger than the July estimate. Two thirds of the time, the final crop fell between 16 percent above to 10 percent below the July estimate. Durum production was pegged at 128 million bushels, up 29 percent from last year's crop and slightly larger (2 million bushels) than trade's average estimate. In aggregate, total wheat production was put at 2,243 million bushels, 59 million bushels less than last year's crop but up 1.4 percent from the USDA's June projection.

Export activity is the second lowest on record for this date. As of June 29, only 207 million bushels of wheat had been committed for export (including some 18 million bushels of "food aid" donations which was contracted for by the CCC but not yet shipped). On average, 27 percent of annual wheat grain exports are booked by this date. As expected, the USDA lowered its projection for exports to 1,100 million bushels, a decrease of 25 million bushels from their June projection. Approximately 1,060 million bushels of that export projection consists of wheat as grain. Using the average ratio of July commitments/annual exports, we should have 286 million bushels sold by now.

The USDA slashed their estimate of wheat feeding by 50 million bushels. Some decrease in wheat feeding had been expected due to the high premium that wheat has over feed grains. The USDA raised its estimate of ending stocks by 138 million bushels and they lowered their price forecast by $0.15. The mid-point of the range of the USDA's forecast for wheat now stands at $2.50, identical to last year's price.

Seasonally, wheat prices tend to bottom in July. The prospect for a slightly larger spring wheat crop (and possibly a better than expected Canadian crop), combined with a lackluster outlook in export demand and weakness in the feed grain and oilseed markets, makes a strong fundamental case for a further decline in market prices. However, "election year" politics, combined with a slackening of harvest pressure could provide a fundamental basis for the beginning of a post-harvest rally. Lower world wheat production, possibly the tightest world ending stocks in over 40 years, and any unexpected problems with the S. Hemisphere's wheat crop could also provide support to the market. Farmers, who sell their grain and take the LDP, may want to consider purchasing at-the-money December of March call options (to replace their ownership) sometime in the next 30-60 days.

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