Spring wheat is expected to account for more than a third of U.S. wheat production, an exceptionally high percent. U.S. wheat production in 1996 is projected at 2,074 million bushels, the fourth consecutive decline. Wheat production has dropped below 2.1 billion bushels 6 times in the last 20 years, but in all but 2 of those years planted area was lower than for 1996. This year is an example of how producers can respond to high prices with increased area, but achieve reduced production because of unfavorable weather. Reduced U.S. wheat production is occurring when beginning stocks are forecast to be exceptionally low.
Imports are likely to increase, especially if Canada has a large, good quality crop.
But unless yields are exceptional in Canada, there should be enough offshore demand for Canadian wheat. High wheat prices are expected to have little effect on U.S. food use. Even after strong flour price increases, wheat accounts for less than 10 percent of the cost of a loaf of bread. U.S. consumers are affluent enough that small price increases do not affect purchasing patterns as much as changing tastes and preferences. Population increases provide the basis for slow growth.