Released: May 10, 2002
Volume 02, No. 5

Seeding of wheat acres began the second week of September and progressed ahead of normal through completion. Fifty-five percent was seeded and 22 percent was emerged by the end of September, ahead of the 5 year average of 33 percent and 14 percent, respectively. Dry conditions, partic- ularly in the central and western districts during October, hampered wheat emergence and caused condition to decline. Wheat seeding was complete by the second week of November.

Light rains the last half of November were not sufficient to improve wheat condition. Wheat condition had dropped from 73 percent good-to-excellent in mid-October to 47 percent good-to-excellent by the first of December. Ninety-nine percent of the crop was emerged by the first of December. Wheat condition suffered over the winter as dry conditions persisted. On March 4, 36 percent of the crop was rated to be in poor to very poor condition. Scattered rains in mid-April improved conditions in some areas. However, on April 28, 40 percent of the crop was judged to be in poor to very poor condition, compared to 38 percent the previous year. As of April 28, 68 percent of the crop was jointed, compared with 64 percent last year and the 5-yr average of 83 percent. Statewide, subsoil conditions were rated 69 percent short to very short, compared to 24 percent last year.

Table 1-- KANSAS WHEAT PRODUCTION, MAY 1, 2002
District	Acres Planted		Acres Harvested			Yield Per Acre		Production
	2001	2002	2001	2002	% of Prev. Yr	2001	2002	2001	2002	% of Prev. Yr
WINTER WHEAT	- - - - - - - - 1,000 Acres - - - - - - - -				Percent	Bushels		1,000 Bushels		Percent
Northwest	1,100	990	980	935	95	40	38	39,270	35,100	89
West Central	1,210	970	795	715	90	35	32	27,615	22,600	82
Southwest	1,590	1,400	1,210	835	69	41	31	49,410	26,200	53
North Central	1,350	1,220	1,155	1,135	98	40	42	45,775	47,800	104
Central	1,510	1,540	1,345	1,460	109	40	40	54,455	58,200	107
South Central	2,140	2,290	1,895	1,980	104	39	33	73,935	64,800	88
Northeast	190	240	165	230	139	45	43	7,405	9,900	134
East Central	230	270	215	250	116	48	40	10,315	10,100	98
Southeast	480	480	440	460	105	45	46	19,820	21,300	107
State	9,800	9,400	8,200	8,000	98	40	37	328,000	296,000	90

Winter wheat production is forecast at 1.30 billion bushels, down 4 percent from 2001 (see table 2) to the lowest level since 1978. Based on May 1 conditions, the U.S. yield is forecast at 43.1 bushels per acre, 0.4 bushel less than last year. Grain

area totals 30.2 million acres, down 4 percent from last season. This is the lowest harvested acreage since 1917.

Table 2-- WINTER WHEAT, KANSAS AND SELECTED STATES 1/, MAY 1, 2002
State	Acreage			Yield Per Acre		Production
	Harvested 2001	For Harvest 2002	% of Prev. Yr.	2001	2002	2001	2002	% of Prev. Yr.
	1,000 Acres		Percent	Bushels		1,000 Bushels		Percent
KANSAS	8,200	8,000	98	40.0	37.0	328,000	296,000	90
Washington	1,750	1,700	97	61.0	66.0	106,750	112,200	105
Oklahoma	3,700	3,600	97	33.0	31.0	122,100	111,600	91
Texas	3,200	2,500	78	34.0	32.0	108,800	80,000	74
Nebraska	1,600	1,600	100	37.0	36.0	59,200	57,600	97
Ohio	900	825	92	67.0	66.0	60,300	54,450	90
Colorado	2,000	1,800	90	33.0	30.0	66,000	54,000	82
Idaho	710	690	97	73.0	77.0	51,830	53,130	103
Arkansas	970	800	82	52.0	53.0	50,440	42,400	84
South Dakota	370	1,050	284	32.0	40.0	11,840	42,000	355
United States	31,295	30,174	96	43.5	43.1	1,361,479	1,300,726	96

1/ Selected states based on top 10 states according to production of winter wheat.

Two pre- harvest protein prediction models (pre- heading and post- heading) were created using plant, location, variety, and weather data from approximately 200 samples per year for 5 years (1997- 2001). These models were developed in collaboration with Kansas Agricultural Statistics Service (KASS). Using 133 samples collected by KASS, the predicted State average protein content for the 2002 crop year was 11.9 percent. The pre- heading prediction model, based on the past five years data, resulted in predicted values within 0.3 percent of the actual State average.

MARKET IMPLICATIONS
by Bill Tierney, Kansas State University - Extension Service

The USDA's first estimate of the winter wheat crop was smaller than the average of a survey of industry pre-release estimates. At 1,301 million bushels, the 2002 winter wheat crop was 24 million bushels below the average estimate, and 4.4 percent (60 million bushels) less than last year's crop. The discrepancy between the May Report and industry expectations was 1.8 percent, much better than last year's 5.7 percent. The 2002 crop is down due to a combination of lower harvested acres (down 3.6 percent) and lower yields (down 1 percent).

This week, a weighted index of U.S. winter wheat crop conditions had a value of 307 (300 = Fair and 400 = Good). That's 19 points below last year and 44 points less than the sixteen year average for this time of year. Based on current crop conditions, models project all U.S. winter wheat yields to be 41.0 bushels, that's 3.5 bushels less than last year's yield and it's 2.1 bushels less than the USDA's May yield of 43.1 bushels. Assuming harvested acres remain unchanged at 30.17 million acres, the model suggests that the June winter wheat production estimate could be 1,237 million bushels (down 64 million bushels from the May estimate). Similarly, a model of HRW yields is projecting a HRW yield of 33.1 bushels. That's 3.6 bushels less than last year's yield and it's 2.1 bushels less than the USDA's May "implied" HRW yield of 35.3 bushels. Assuming HRW harvested acres remain unchanged at 20.34 million acres, the model suggests that the June HRW estimate could be 673 million bushels (44 million bushels smaller than the May estimate).

In its "May Crop Summary " the USDA said that winter wheat area harvested (30.17 million acres) would be the smallest since 1917. However, in its Prospective Plantings report (released March 28) the USDA estimated that winter wheat area planted (41.08 million acres) was the smallest since 1971. Therefore, 26.5 percent of 2002 winter wheat seeded acres are going to be abandoned (or grazed out). Last year, abandonment was 23.8 percent. This is the second largest rate of abandonment in over 50 years. In 1951, 28.6 percent of winter wheat acres were abandoned.

While the USDA did not provide specific figures for HRW harvested acreage, based on abandonment in the principal HRW producing states, all HRW abandonment is estimated to be 31 percent ( the highest in over 30 years). Last year 's was 28 percent. The previous high HRW abandonment figure was 30 percent in 1989.

The USDA's World Board (an in-house group of economists who provide supply and demand projections) lowered their U.S. total wheat production to 1,886 million bushels, down 72 million bushels from last year. If correct, this would be the smallest wheat crop since 1988/89 (1,812 million bushels).

The World Board made changes in the other components of their supply and demand projections (relative to their February projections). They lowered food use, industrial, and seed use by 8 million bushels and reduced feed use by 25 million bushels. The midpoint of the range of the USDA's forecast for annual average prices rose to $2.80. That's up from the February forecast of $2.75/bushel and $.02 higher than the 2001/02 price.

Given the strongest pace of export sales in four years, it is somewhat surprising that the USDA lowered their projection for wheat exports to 875 million bushels. That's down 25 million bushels from the February projection, down 100 million bushels from last year and the lowest exports since 1971/72 (610 million bushels). As of the beginning of May, export commitments were estimated to be 45 million bushels. That's up 25 million bushels from last year.

The USDA estimates world wheat production will be 595.8 million metric tons (MMT). That's up 15.1 MMT from last year. Despite the increase in production, the USDA reduced their estimate of world ending stocks. Ending stocks are now projected to be just 27.2 percent, down from last year's 27.7 percent and the lowest ratio since 1996/97 (25.3 percent). The USDA is also projecting that world imports will be 104.5 MMT, down slightly from last year's 106.4 MMT

Seasonally, harvest pressure could eventually push KCBT July futures lower. In the last two weeks, however, July futures have demonstrated considerable resistance to downside pressure. If winter wheat and spring wheat crop prospects worsen, prices could move higher. However, should relatively "normal" conditions prevail, and considering the low level of export demand, wheat futures (and cash prices) would probably move lower and challenge the previous life-of-contract lows. With new crop wheat prices below the "new" higher loan rate of $2.80, most producers have no incentive to price new crop wheat at this time.

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