King Wheat hasn’t been winning farmer’s hearts recently, and as it continues to lag behind expectations for other crops, many are wondering if wheat will drop completely out of favour this year.
“A lot of people have been saying wheat looks like crap,” said David Reimann, a broker with Benson Quinn-GMS in Winnipeg.
Saskatchewan Agriculture agrologist Ed Tanner said farmers near his town of Indian Head tell him they would like to take advantage of the much better price outlook for canola.
“They see fall prices of eight bucks a bushel,” said Tanner.
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Many also have high hopes for lentils, but if farmers plant more canola and lentils, they have to plant less of some other crop.
“There certainly won’t be an increase of wheat acres this spring around here,” said Tanner. “Any increase in other crops will come at the expense of wheat.”
When the Canadian Wheat Board’s first 2004-05 Pool Return Outlook price expectations were released in February, some analysts were surprised by how low wheat prices had been set, with No. 1 Canada Western Spring Wheat with 14.5 percent protein pegged at $208 per tonne, or $5.66 per bushel.
On March 25, the board revised the PRO, boosting expected wheat prices to $224 per tonne, or $6.10 per bu., for the same grade.
Historically speaking, those are good prices. But compared to crops like canola, wheat can seem the worse bet come spring seeding season.
But Tanner and Reimann said wheat acreage might fall less than many would expect because farmers have been shunning wheat in recent years. With farmers committing themselves to optimal crop rotation patterns, they don’t have much free acreage to play with.
“Many guys have already minimized the wheat in their rotation, and maximized the canola,” said Reimann.
“My gut feeling is that none of those … will change by more than five percent.”
Reimann was expecting wheat acreage to fall by 15-20 percent this spring because of its comparatively poor price, but now thinks it may fall by less than five percent.
Tanner said a few years ago the present differential between expected wheat and canola returns could have led to a 20 or 30 percent increase in canola and a similar drop in wheat acreage. But continuous cropping and zero till agriculture have made farmers apprehensive about taking production risks for the chance of cashing in on the market.
Reimann said farmers also know that sometimes the least attractive crop at seeding time can become one of the best returning crops at harvest.
And when wheat is carefully scrutinized, some farmers think it is being underrated.
“Some of the guys are saying if you pencil out the wheat, it looks pretty darned good,” said Reimann.
In recent years vegetable oil crops like canola have taken the spotlight across the world, but wheat could get its day in the sun again Ð even this year.
“If you look at the international outlook (for wheat), it’s pretty promising,” said Reimann.
