MANHATTAN, Kan. – The outlook for wheat has entered "best guess" territory, says Kansas State University economist Bill Tierney.

The weather has been flexing its yield-affecting muscles for all classes of wheat grown in the United States. Even so, the amount of acreage that will go down for the count is still in doubt. Plus, the demand outlook for the marketing year that begins June 1 is mixed, at best.

Tierney, who is the grain marketing analyst for K-State Research and Extension, does weekly analyses of how each wheat crop’s progress and condition compare to historical trends. Both factors were lagging as May began, giving U.S. winter wheat conditions a weighted index value of 329 – not only below "average" (353) but also well below last year’s levels (371).

Soft red varieties were the only winter wheats registering above-average progress. They were vulnerable, however, due to ongoing moisture problems in the Ohio River Valley and Pacific Northwest.

The hard red winter wheat grown in U.S. Plains states was the main reason winter wheat’s overall index value was down. Projections were putting the Texas harvest at 87 million bushels – up 32 percent from last year’s. But other states were struggling hard enough to drag all index values under.

Analysts were predicting South Dakota’s production would be less than half of last year’s harvest.

The experts on the Wheat Quality Council’s annual field tour in early May concluded 2001 would bring a 20 percent drop in Kansas production. One group predicted a 39 percent smaller Oklahoma crop.

"Crop conditions in the Plains also have a strong relationship to producers’ decision to abandon acreage. Of course ... so do such factors as soil moisture, cattle prices and wheat prices," Tierney said.

Winter wheat growers will have to make that abandonment decision within the next few weeks.

Tierney suspects the abandonment rate will be higher than average, but believes predicting farmers’ management decisions is risky business.

In fact, acreage abandonment forecasts may be one reason that the Wheat Quality Council tour and USDA’s first (May) winter wheat estimate both tend to underestimate the size of the final harvest, he said. An equally "iffy" forecast is the amount of acreage that farmers will plant.

For example, weather is causing serious delays in seeding the 2001 U.S. spring wheat crop, particularly in North Dakota and Minnesota. It’s also affecting the outlook for Canada’s spring wheat – although so far, Statistics Canada is predicting acreage will be just 1 percent smaller.

Right now, the potential for winter wheat trade is hard to predict, too. Tierney said futures prices have been trading above the range normally associated with USDA’s early winter wheat price predictions.

Yet, trade partners haven’t been rushing to book new-crop U.S. wheat exports. In mid-April, sales were the third lowest on record.

Canada, Argentina and Australia will have large exportable wheat supplies for the coming year.

In addition, many analysts are predicting wheat’s use as a U.S. livestock feed will drop 25-50 million bushels.

On the other hand, old-crop U.S. wheat exports are ahead of the pace needed to meet USDA’s prediction for 2000-2001. The European Union’s wheat crop is having serious problems. And, a widely expected, but small decrease in the upcoming year’s global wheat production, combined with a slight drop in "trend" consumption, could take world ending stocks to the lowest levels since World War II.

"If I were a farmer who hadn’t priced any of my new crop, I might want to take advantage of the current futures market strength," Tierney said. "I wouldn’t sell much, however, without using the options market to cover my position.

"Traditionally, prices drop with the onset of harvest. But if anything affects the quality or quantity of the winter wheat crop ... if anything reduces the world’s expected exportable supplies ... if anything takes projected U.S. wheat exports above last year’s levels ... prices could continue to rise. Even a so-called ‘drought rally’ in the corn and soybean markets could lend some support to wheat prices."