For the 1986/87 wheat marketing year, hard red winter (HRW) wheat planted acres were 36.3 million, and harvested acres were 28.6 million. In the 2019/20 (fall 2018) wheat marketing year, HRW wheat planted acres were 22.7 million, and 17.5 million acres were harvested. What happened to the 13.6 million planted acres?
Oklahoma and Texas wheat — Oklahoma and Texas wheat is mostly HRW wheat — planted acres hit a peak during the 2003/04 marketing year. Between the 2003/04 and 2019/20 wheat marketing years, Oklahoma wheat planted acres declined 2.3 million acres from 6.7 million acres to 4.4 million acres. Texas wheat planted acres declined 2.1 million acres from 6.6 million acres to 4.5 million acres. Between 2003 and 2019, Oklahoma and Texas planted wheat acreage combined declined 4.4 million acres. Essentially, one-third of Oklahoma and Texas’ wheat acres were taken out of wheat production.
Farmers control the use of land, labor, capital (inputs), and management. Changing costs and prices create the necessity to change land, labor, capital, and management use.
The USDA/NASS Census was conducted in 2002, 2007, 2012, and 2017. The Oklahoma and Texas census shows that all farm and ranch expenses increased 70 percent between 2002 and 2017, 40 percent between 2007 and 2017, and 5 percent between 2012 and 2017. The data further shows that the individual input cost increases were highest during the 10 years between 2002 and 2012. Cost for fertilizer and petroleum products actually declined between the 2012 Census and 2017 Census. Rental costs increased seven percent between 2012 and 2017.
A review of wheat prices shows that between June 2003/04 and October 2019/20, wheat prices have been as low as $2.53 (August 30, 2016), as high as $12.63 (March 12, 2008), and have averaged $5.24 (Figure 1: Burlington, Oklahoma). Wheat prices went above $5 in June of 2007 and remained above $5 until October of 2008.
Prices reached a bottom level ($4.33) in early December 2008, but by mid-December, they were back above $5. By the 2009 wheat harvest, prices were above $6. Between late June 2009 and July 2010, wheat prices traded mostly below $5 and trended down to $3.40 in July 2010.
A relatively high-quality wheat crop in 2010 and a one-billion-bushel decline in Black Sea wheat production resulted in a $5.50 price increase. Prices stayed mostly above $6 until August of 2014. Since June of 2015, wheat prices have been below the cost of production for many producers.
The reduction in HRW wheat planted acres may have resulted from increased land requirements needed for corn to produce ethanol as well as production changes taking place in the Black Sea countries (Russia, Ukraine, and Kazakhstan). Black Sea wheat exports increased from 268 million bushels during the 2006/07 wheat marketing year to 2.5 billion bushels during the 2017/18 wheat marketing year.
Data shows that, between 2003 and 2019, Oklahoma/Texas corn planted acres increased 800 thousand acres, cotton increased 1.9 million acres, sorghum declined 1.7 million acres, and soybeans increased 80 thousand acres.
According to USDA/NASS data, Oklahoma and Texas wheat planted acres have declined by 4.4 million acres. The net increase from major Oklahoma/Texas crops other than wheat has been 1.2 million acres. This leaves 3.2 million acres that are now used for other purposes than growing wheat, corn, cotton, sorghum, and soybeans. The most likely use for these 3.2 million acres is pasture production and a small amount for producing minor crops.
Relatively low wheat prices, relatively high wheat production costs, and continued wheat export competition from the Black Sea countries will continue to limit any increase in wheat planted acres.