By Jeri Stroade, Mykel Taylor and Michael Boland, Kansas State University.

Revised November 2010.

Background
Wheat is the third-largest field crop in the United States, following corn and soybeans. In 2010 the United States raised 2.2 billion bushels of wheat, up slightly from 2009. The states growing the most wheat included (in order by volume): North Dakota, Kansas, Montana, Washington and Texas.  (NASS 2010)

Since 1981 the area harvested for wheat has decreased to about 50 million acres. The cause of this decline is twofold. First, foreign competition for the wheat market has caused wheat returns to decrease relative to other crops that U.S. farmers could produce. Next, current government programs allow these alternative crops to be planted. In 2010 the total area harvested for wheat was 47.6 million acres, down 4 percent from the previous year (NASS 2010).    

Production
Wheat produced in the United States can be divided into five major classes (Table 1). Each class of wheat has its own characteristics related to milling, baking or other food use. Most classes contain both winter and spring varieties. Winter wheat is sown in the fall and harvested in the summer. Seventy to eighty percent of U.S. wheat production is winter wheat. The crop establishes itself in the fall, goes into dormancy over the winter and resumes growth in the spring. Spring wheat is planted where the winters are particularly harsh and winter wheat would not survive. It is sown in the spring and harvested in the late summer or fall.

Table 1. U.S. wheat classes.

Production of hard red winter wheat in the United States totaled 1.0 billion bushels, making this wheat class the most frequently grown commercial wheat. More than 580.6 million bushels of hard red spring wheat and more than 237.8 million bushels of soft red winter wheat were also grown in 2010.

According to the Foreign Ag Service (FAS), world wheat production totaled 641.4 million metric tons (MT) in 2010. The European Union was the world’s largest wheat producer, harvesting 136.3 million MT. China, the world’s second-largest producer of wheat, raised 114.5 million MT, while India was the third-largest producer, raising 80.7 million MT. The United States ranked fourth, producing 60.5 million MT.

Since the early 1980s, government farm programs have allowed production choices, and the result has been a steady decline in wheat acres planted. The 1985 Farm Act introduced the Conservation Reserve Program (CRP) and offered to pay farmers for idling their land for a certain time period. The 1990 Farm Act allowed planting flexibility; producers could plant up to 25 percent of their base wheat acreage to other crops without losing base acreage. As a result, the acres planted to soybeans, corn and other crops increased and acres planted to wheat decreased. The 1996 Farm Act decoupled government payments from planted acres. Accordingly, farmers did not have to maintain any base acreage. Acreage has increased due to higher commodity prices. Due to strong genetic improvements, corn and soybeans will now grow in areas where they previously would not.

Prices
The 2009 wheat crop averaged $4.87 per bushel, down from the record 2008 price of $6.78. Durum wheat commanded the highest average price, $5.80 per bushel. Hard red winter wheat prices averaged $4.84 per bushel, while hard red spring wheat prices averaged $5.26 per bushel.  (NASS 2010).

Prices have fluctuated in the last twenty years, but they ended the period at their highest in nominal terms since the 1970s. However, real prices are significantly lower than their 1996 peak. Like the mid-1990s, both world and U.S. supplies are low and so prices have increased. However, yield increases due to improved varieties and production methods have compensated somewhat for lower real prices.

Demand
Since most food products made from wheat are highly processed, changes in wheat price do not affect their consumption. Per person wheat consumption has been declining since the mid 1800s due to a decrease in physical labor and an increasingly diverse diet. In 1879, per person wheat flour consumption was 225 pounds. That number reached a low of 110 pounds in 1972. Consumption rebounded to 148 pounds per person by 2000, partially as a result of  the popularity of pizza and other wheat-based foods. As of 2008, per person consumption of wheat flour totaled 137 pounds.

Exports/Imports
The United States exported 881.0 million bushels of wheat in 2009. The largest share of the wheat, 97 percent, was exported as grain rather than as wheat flour or wheat products. The largest buyers of U.S. wheat were Japan, Nigeria and Mexico.

While it remains the world’s largest wheat exporter, the the U.S. share of wheat exports has decreased in the past twenty years, hovering around 27 percent in 2010. In 1981 U.S. exports made up 45 percent of the global market. Since 1990 U.S. market share has varied between more than 20 percent and 35 percent.

More than 118.6 million bushels of wheat were imported in 2009. Similar to exports, the majority of the wheat imports were in the form of grain. The United States primarily imports wheat from Canada.


Profile written October 2005 and revised November 2010.