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As seeding of the new US winter wheat crop hits full stride, a combination of high fertiliser prices and a slump in wheat prices was expected to translate to lower US winter wheat production for 2009. "I think we'll have less wheat than last year," said Oklahoma State University small grains specialist Jeff Edwards.
"With the price of inputs ... some people are backing off. And those who are putting wheat in the ground are putting less fertiliser down." A year ago US wheat farmers were fretting over weather woes and a lack of quality seed. This year, planting conditions are much improved. Still, declines are seen likely.
Allendale Inc analyst Joe Victor said he anticipated seedings to decline by 2-3 percent, with producers planting more of their land to corn and soybeans in the spring. "Overall, we do anticipate a reduction," said Victor. If that pattern is repeated in other major wheat-producing nations, world stocks will tighten even further.
North America Risk Management Services Inc also was looking for decline in seedings. The company said this week that US winter wheat seeding could be down 2.5 million acres from last season. Some 46 million acres were planted to winter wheat last season, according to the US Department of Agriculture. That was up more than 2.5 percent from the season before as farmers responded to rising wheat prices.
But the expected decline for the 2009 crop is already a reality for Kansas wheat producer Dean Stoskopf, who started planting his hard red winter wheat Monday afternoon, taking advantage of mild temperatures and good soil moisture.
Kansas is the top US wheat-producing state, a key source for bread-making hard red winter wheat. But Stoskopf said he is planting about 10 percent fewer wheat acres this year in part because of the high cost of fertiliser and declining wheat prices.
"We've got good moisture and all that, but our cash price today is $6.18 a bushel. For new crop we could lock in $6.62 - but $7 a bushel is break-even," said Stoskopf. Fertiliser prices climbed sharply over the last year, with farmers now forced to budget roughly between $100 and $120 an acre for the season, up about double from two years ago.
Wheat prices also spiked higher this year over last year, but have been trending lower lately amid widespread nervousness over spreading economic woes. On Monday, the spot Kansas City Board of Trade December wheat futures contract ended down 40-3/4 cents at $7.05, the lowest level since November 2007. KCBT hard red winter wheat futures hit a record high of $13.84-3/4 a bushel on February 27.
Fear of further price declines was a key reason many producers were lightening up on fertiliser, a move that saves money, but also could cut yields in half. The reduced planting intentions were seen impacting the fattening of beef cattle.
Typically, about half of Southern Plains wheat fields are grazed as a means to add weight to beef cattle for market. But with roughly 30 pounds of costly nitrogen needed to fertilize enough wheat to put 100 pounds on each animal, the math is not appealing, said producers and analysts. About 42 percent of the new winter wheat crop was planted as of Sunday, according to the US Department of Agriculture, just lagging the 45 percent five-year average for this time.
Agronomists said fields that have been heavily fertilised in past seasons may still have enough nitrogen and phosphorus in the soil profile to produce good yields. Still, overall declines are likely. "You do need fertiliser," said Kansas State University extension agronomist Bill Here.

Copyright Reuters, 2008

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