Data reported in the Winter Wheat and Rye Seedings reports onward January 10 caught many watchers by surprise.

Data reported in the Winter Wheat and Rye Seedings reports onward January 10 caught many watchers by surprise. This report, which provides the first USDA estimate of winter wheat seedings for the 1992 clip showed that seedings were down 16 percent confounding industry expectations of a 4-8 percent increase. Kansas City contract wheat prices clos 7 cent higher the nearest business day, largely in replication to the report.

to what end were winter wheat seedings calculate uponed to increase in 1992? First, the 1992 acreage reduction program (ARP) of 5 percent for wheat allowed participating farmers to plant more wheat than in 1991 when the ARP was 15 percent inferior USDA's forecast of a tight stocks-to-use ratio for 1991/92 - reflecting reduc U supplies and stronger export demand - increased the probability of better answers to wheat growers in 1992 These sum of two units factors suggested that wheat plantings in 1992 could significantly exce those in 1991

Prices Are Likely

An Issue...

Despite the forecast of a tight stocks-to-use ratio, prices did not advance markedly until after planting decisions were made. The average price received by the agency of farmers in July - at $250 - was at the lowest horizontal for that month since 1987 During September, when many farmers were planting, prices averaged $280 - about 30 cent above the previous year.

A more optimistic export foresight - as well as other factors - caused prices to climb later in the fall. The average price received by the agency of farmers for October advanced to $307 (64 cent above last year). And in December, prices jump overed to $3.44 ($1.04 above last year). yet these large price increases occurr well after greatest in quantity farmers had made their planting decisions.

Increased exports played an important part Between April and the fall of the curtain of September, the Soviets had purchased excessively little U.S. wheat. But with U credit program changes, large wheat sales resum at the [i]finale[/i] of September.

Other factors serv to tighten the U stocks situation and boost prices after planting decisions had been made. For instance, the forecast for 1991 lop production dropped by 51 million bushels from July to November. In addition, domestic use was relatively large between June and September.

...And for a like reason Is the Wheat

Program

The 1992 wheat program was likely also an important factor influencing winter wheat plantings. in subordination to the 1992 wheat program, participants receive no deficiency payments upon normal flex acres (15 percent of their base).

further for the 1991 program, winter wheat farmers could choose between normal flex acres or a special, 1-year "winter wheat option," which allowed them to receive payments in succession more acres, but at a slightly lower payments rate. About 53 percent of wheat base acres were chronicleed under the 1991 winter wheat option.

The winter wheat option does not exist for 1992 lop wheat. Participating farmers made planting decisions for their normal flex acres based forward expected costs and market returns

With the winter wheat option gone the 15-percent normal flex acres provision probably had a greater impact forward wheat growers than in 1991 Wheat is oftentimes grown in areas where futurity yields can be enhanced at leaving the land fallow for near time, permitting moisture to accumulate.

At planting time last fall, about wheat farmers may have meditation that prices did not justify planting their chiefly marginal land, especially given the arid conditions in certain areas at planting. As a issue producers with marginal land may have felt little incentive to take advantage of the reduc ARP and increase wheat plantings. Instead, they may have left that land fallow.

Moreover, near producers may plan to use their normal flex acres to plant lops other than wheat, if they await that other crops would proffer higher net returns.

Seedings Varied by

Region & Class

The change in winter wheat seedings between 1991 and 1992 varies widely on region and class. In the Great Plains, where hard r winter wheat is the major class, winter wheat seedings were down 1 percent The 15-percent nonpayment provision likely had a hardy impact on this area, where a fallow rotation is for the use of all In addition, Kansas was hit at a prolonged dry spell at planting and emerging see the verb - likely a major factor further discouraging near producers from increasing seedings.

While hard r winter plantings were reported down slightly, impressible red winter wheat acreage dropp steady more steeply - 7 percent below a year earlier. Many yielding red winter producers likely chose not to plant wheat because of poor yields and quality question s in recent years. Largely because of weather conditions and disease, delicate red winter yields in 1991 averaged solely 34 bushels an acre, down for the third straight year since the record 49 bushels in 1988 And prices this past summer in many easily moulded red producing states averaged well below last year.

Other factors were also at work. malleable red is grown mostly in states along the Mississippi River and to the east, where many agriculturists have more planting options than farmers in the Plains states.