How Low Could Wheat Acres Go?

One of the key questions agricultural retailers will face this fall, especially in the Western, Great Plains regions of the country, is “how low could wheat acres go?” Given the tough economic pressures that wheat producers across the country are facing – struggling to fully cover variable costs (and not covering any cash rent or fixed, overhead expenses), many producers are looking for alternatives. In fact, the large 2016 U.S. corn crop was more of a decision between corn-versus-wheat than the traditional corn-versus-soybeans.

Ag Trend

In figure 1, the long-run trend in wheat acres is illustrated. Wheat acres were lowest, at fewer than 50 million acres, a few times between 1950 and 1970.

Figure 1

More recently, figure 2, total U.S. wheat acres have been on a downward-trend since 1980. In fact, 2015 marked a 35 year low at slightly more than 50 million acres. For context, U.S. wheat acres were nearly 90 million acres in 1980. Coincidentally, 90 million acres has been the “big acreage” level for corn in recent years – so you can tell how the tide has really shifted over the last few years.

Local Implications

Looking to 2017, it seems that yet another year of declining wheat acres is in store. What are the implications for the local retailer? County and Regional acres can vary significantly by year as weather conditions, local grain market conditions, and weather conditions all play an important role in the decisions at the farm-level. It’s important to consider 1) How large is the local market for wheat acres 2) how has this trended in recent years and 3) what consider the implications for 2017.

For more about the wheat acre market in your region, visit your Local Market Insights platform, here, and Localize the Ag Trends.