US Hard Red Winter Wheat Crop Seen Down From May

The U.S. Department of Agriculture is expected to trim its forecast for the 2010-11 U.S. winter wheat crop from last month, with analysts projecting a drop in hard red winter wheat production.

The government is slated to issue crop-production and supply/demand estimates in crop reports due at 8:30 a.m. EDT Thursday.

The average of analysts estimates for all winter wheat production is 1.453 billion bushels, slightly below USDA's May estimate of 1.458 billion, according to a Dow Jones Newswires survey of 13 analysts.

The average of analysts' estimates for production of HRW wheat, grown in the Plains and used to make bread, is 939 million bushels, down from USDA's May estimate of 960 million, according to a survey of 16 analysts. Nine of those surveyed said they were expecting a drop.

Declining condition ratings from the USDA indicate that production estimates should drop, said Jerry Gidel, analyst for North America Risk Management Services. The crop in Kansas, typically the country's top wheat-producing state, was rated 56% good to excellent as of Sunday, down from 64% as of May 9.

There are concerns that fungal diseases, such as stripe rust, will reduce yields and quality of hard red winter wheat. Wet weather encouraged diseases to spread in some parts of the Plains.

The average of analysts' estimates for soft red winter wheat production is 288 million bushels, up slightly from USDA's May estimate of 283 million. SRW wheat, grown in the Midwest and Delta, is used to make pastries and snack foods.

Yields for SRW wheat should be strong, although there are worries about quality, said Dan Manternach, agriculture-services director for Doane Advisory Services. He projected USDA will raise its SRW wheat production estimate to 299 million bushels. Gidel disagreed and projected a drop to 279 million due to excessive wetness in some growing areas.

The average of analysts' estimates for white winter wheat production is 217 million bushels, above USDA's May estimate of 215 million. Depending on the variety, white winter wheat is used for noodles, breads and other products.

The average estimate for all U.S. wheat production for 2010-11 is 2.054 billion bushels, up from USDA's May estimate of 2.043 billion, according to a survey of eight analysts. The increased production estimate could prompt USDA to raise its 2010-11 wheat ending stocks forecast from last month's 997 million, Manternach said.

However, analysts like Gidel, who expect to see declines in production estimates, forecast USDA will cut its carryout forecast. The average of analysts' estimates for 2010-11 carryout is 987 million, down 10 million from USDA's May estimate, according to a survey of 19 analysts.

The average of analysts' estimates for 2009-10 carryout is 947 million, down slightly from USDA's May estimate of 950 million. The 2009-10 crop was cut last year, and the 2010-11 crop is in the ground or being harvested.

Source: CME Group