By the end of this week American farmers will have seeded about half their winter wheat.
The question for markets is how many acres will they seed.
Kansas remains the heartland of U.S. wheat production, but in recent years the crop has lost ground to corn and soybeans across the state, says a professor of agricultural economics at Kansas State University.
One of the primary reasons for wheat’s downward trend, said Michael Langemeier, is that wheat seed technology has not kept pace with improvements in corn and soybeans.
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“Corn yields have been outpacing wheat yield trends in the last few years. That’s really, really evident,” said Langemeier, who specializes in crop production economics.
“The hybrid corn developments have just been tremendous.”
In addition, he said no-till practices have made it possible to grow crops other than wheat in the central part of Kansas, a state that receives the most moisture in the east, and progressively less rainfall going west.
“We do see more people that have rotations that have feed grains, soybeans and wheat in them, whereas historically there were more producers that were continuous wheat,” Langemeier said.
“Because they’re conserving enough moisture (with no-till) that it allows them to produce the feed grains and oilseed.”
In recent weeks there have been rumours that American farmers who traditionally plant winter wheat are being scared off by record high costs for fertilizer.
Based on statistics from the Nebraska government website, prices in the northern plains of the United States have doubled for certain types of fertilizer.
In 2007, the average price for diammonium phosphate was $476 per tonne and $963 per tonne in 2008. Ammonium nitrate climbed to $503.80 per tonne from $391.60.
Regardless, Langemeier discounts the impact of fertilizer costs on producers’ intentions. He said that potential returns have a much greater influence on what is planted.
“Yes, there are higher prices for fertilizer, but that’s not just going to impact wheat,” he said.
“Certainly corn, and sorghum too, would take more fertilizer than wheat …. If individuals think feed grain prices are going to stay strong (compared to wheat), I think that’s more important to them than the high price of fertilizer.”
After a stunning run-up that took wheat prices above $12 (US) per bushel on the Kansas City Board of Trade this spring, by Sept. 29 futures prices had dropped to $7.05 per bu. for the nearby contract.
A huge crop of soft red winter wheat (SRW) in states east of Kansas is one of the forces that drove wheat prices down over the summer. According to U.S. Department of Agriculture estimates, SRW production in the 2007-08 crop year was 609 million bushels, the highest total since 1981 when U.S. farmers produced 678 million bu.
The glut of soft wheat has hammered farmgate prices in Illinois, said Darrel Good, professor of agricultural economics at the University of Illinois.
Earlier this week, local elevator bids for SRW had dropped below $4.50 per bu., Good said, compared to $8.50 per bu. last year at this time.
As a result, farmers in the state are backing away from soft winter wheat this fall.
“The thinking is down on the acreage, following the big increase last year,” Good said.
“And probably as important, our soybean harvest has been late,” which means farmers may not have time to plant wheat this fall.
