by Ken Root
What can a farmer do about the problem of big supplies and low prices?
Interestingly, Wheat farmers have already cut their acreage after a big crop last summer. Winter wheat is planted in the fall and grows for almost 9 months before harvest. It is mostly a food crop and so far, it is non GMO. Still, the worldwide supply has U.S. farmers trying to find something else to grow that will make more money.
Yesterday’s report on wheat seeding showed the lowest planted acreage in 108 years.
Radio Oklahoma Ag Network Farm Director Ron Hays caught up with Oklahoma State University Grain Market Economist Dr. Kim Anderson to get his take on these reports, particularly including the Winter Wheat Seedings. He admits he was surprised at what this report revealed.
Lower Winter Wheat Planted Acres in USDA Report Catch Trade and Kim Anderson by Surprise
Stakeholders industry wide were on the edge of their seats today in anticipation of several reports out this morning by the US Department of Agriculture.
“You look at Oklahoma down 10 percent from last year down to 4.5 million acres,” Anderson said, noting that it was 1962 the last time planted acres were this low in the state. “You look at all hard red winter wheat – they were looking at 25 million acres, it came in at 23.3. I think this is a big surprise.”
According to Anderson, the markets jumped after the release of this report, which he says signals that come harvest, producers could potentially expect to collect close to a break even price for their wheat. More than this, however, it signals a major shift in the industry as well that aligns with a trend that has been observed for several years now.
“Wheat has seen a shift in Oklahoma and the Great Plains areas,” Anderson said, before reflecting on testimonies that some producers have only profited from one in the last seven crops due to either price or weather conditions. “We’ve seen shifts out of wheat into other crops.”
With the world, described by Anderson as, awash with wheat, this reduction in planted acres could significantly help to improve the economic viability of the crop in the future. However, he warns this is not the soul solution. He cautions producers not to neglect the necessary inputs in order to reduce their overall costs. He insists that is a losing strategy.
“I think the single most important factor to get us close to break even is going to be test weight and protein. If we produce a quality product,” Anderson said, “the markets are going to want to keep it out of storage, they will want to keep it out of the loan and I think they will bid that price up.”