Canadian hard red spring wheat will be the big winner if North Dakota stays wet through the spring, market analysts say.
In the fight for acreage between wheat, corn and soybeans, wheat is the most vulnerable to changed plans due to wet soil.
“If these conditions persist through the middle of April, then the tendency will be for farmers to switch to other crops,” said Bruce Burnett, the Canadian Wheat Board’s head of market analysis and crop condition monitoring.
“With late seeding, you’re giving up wheat’s yield potential, and with the economics of soybeans being so compelling, you’re likely to see a big switch.”
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Heavy rain in the fall left eastern North Dakota sodden, with about one million acres of corn still unharvested. Heavy snowfall has left a big wet blanket across most of North Dakota’s farmland, increasing the likelihood that it will be slow to dry out.
“Unless spring melt conditions are ideal, we’ll likely see extensive delays due to flooding and excess moisture,” Burnett said.
Farmers are dealing with the yearly fight for acres as market prices adjust and offer incentives and disincentives for growing various crops. U.S. farmers grow fewer crops than Canadian producers, with the vast majority of midwest and western production being one of the big three: corn, soybeans or wheat.
Wheat is the smallest of the three, although dominant in the West. However, it is broken into more classes than corn and soybeans, with soft winter wheat and hard red winter wheat making up a majority of U.S. wheat production. Hard red spring wheat has a minority share.
Production changes in a small part of the U.S. wheat zone can have a big effect on North American supplies of hard red spring wheat. Most of the Canadian prairie crop is hard red spring wheat.
The U.S. market for hard red spring wheat is usually high-paying, and the U.S. is a key competitor on the world market for hard red spring wheat sales, which means any significant reduction of U.S. acreage can mean better prices for prairie farmers.
According to U.S. analysts, farmers are now mostly basing their acreage decisions on new crop prices, which show the big three crops generally trading at typical price spreads.
Soybeans have recently crept higher, drawing lots of farmer interest, but so far nothing has become an overwhelming favourite. Soybean prices are still near their long-time average of 2.2 to one in relation to corn, which has led to conflicting signals.
Some analysts have heard that farmers intend to boost spring wheat acreage and some hear they intend to reduce it. Market prices haven’t made it easy for farmers to decide en masse.
However, within a month more farmer attention in the northern tier states will switch to seeding conditions and within two months farmers will have to decide their spring wheat plans.
“If you run into a later spring, you’re less likely to grow wheat and more likely to grow one of the row crops,” Burnett said.
