US production of hard red winter wheat is expected to decrease in 2021 due to lower yields and drought. That could add further support to wheat futures prices, which have rallied on tighter global supplies and increased demand from China.
Gro’s US Hard Red Winter (HRW) Wheat Yield Model is currently predicting an average yield that is more than 10% lower than last year. The crop, currently in its dormant stage, got off to a weak start with dry conditions in western Kansas, Oklahoma, Texas, and Colorado, as the Gro Drought Index shows. The expected lower HRW production comes despite a 5.2% boost in acreage, the first increase in nearly 10 years.
Global demand for US wheat is expected to rise as supplies elsewhere tighten. Russia, the world’s top exporter, has restricted wheat exports to control domestic prices, and Argentina expects a smaller crop due to dry conditions. On the demand size, Gro’s data shows China’s HRW purchases from the US are at record levels, and are expected to continue to increase, as soaring corn prices encourage farmers to switch to wheat from corn for animal feed.
As the US HRW crop breaks dormancy this spring, in-season yields will be closely watched to see if the US crop can satisfy international demand. If the current weak-yield outlook persists, prices may need to appreciate more. Protectionist measures being imposed around the world are curbing exportable wheat supplies, which could place a greater-than-usual burden on the US to meet buying demand.
Click here to register for Gro’s webinar “Will Trade Restrictions and Crop Prospects Curtail Wheat Supplies?” on Feb. 11 at either 10 a.m. ET or 4 p.m. ET.
This insight was powered by the Gro platform, which enables better and faster decisions about factors affecting the entire global agricultural ecosystem. Gro organizes over 40,000 datasets from sources around the world into a unified ontology, which allows users to derive valuable insights such as this one. You can explore the data available on Gro with a free account, or please get in touch if you would like to learn more about a specific crop, region, or business issue.