Market Matters Blog

Spring Wheat, Durum Losing Ground

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
Connect with Mary:
A spring wheat field ready for harvest in fall 2016 near Gettysburg, South Dakota. (Photo courtesy Tom Luken, Onida, South Dakota)

Spring wheat and durum acres are expected to shrink this year as farmers turn to other crops.

While price is one factor in that decision, the cost of raising #1 milling-quality dark northern spring wheat, 14% protein, can be a challenge. As hard as farmers try to use many methods in order to prevent disease and low protein from occurring, all it takes is for the weather to mess everything up. Quality and protein discounts can cut into farmers' profits in a big way if poor weather at the growth stage or harvest causes damage, disease and low protein.

Tim Dufault who farms in Crookston, Minnesota, told me, "On spring wheat acres, I see it down 1% to 2%. I think those extra acres will go to soybeans. I also see corn acres down in northwest Minnesota. Last year, acres were up for corn and there was a good yield to that crop. But with local prices from $2.75 to $3.40, there wasn’t much profit in corn. I see those old corn acres also going to soybeans. The minor crops haven’t had a problem attracting acres. Dry edible beans, sunflower and barley acres should all be up a little and take some of the acres."

Myron Jepson, general manager of Plaza-Makoti Elevator in North Dakota, told me, "In my area, durum and spring wheat acres will be down significantly. Hard to make an accurate prediction, but I would say down 30% on durum and about 15% on wheat. We will replace those acres with canola first, then soybeans, then field peas."

"We are going to see less wheat and durum acres in our area, and the total will be interesting because they have to keep some wheat in rotation just to battle disease down the line," said Jeff Kittell, merchandiser at Border Ag and Energy Russell, North Dakota. "The biggest increase we will see is in soybeans, followed by canola and some pulse. The thing to remember in this area, we are still wheat farmers and even at these price levels, the farmer is going to have to plant wheat."

Kittell added, "We still have lots of snow, and temperatures are just starting to warm. There are lots of snowbanks in sheltered areas, so no spring work anytime soon in northern North Dakota. Reports have it that April may have above-average moisture in our area, which could make for a long, drawn-out spring. They like to get wheat in by early in May, but we all know wheat can go in later. But, the later they get, the more we have to worry about early frost and getting crops to mature and ripen in fall."

P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]

An elevator manager in eastern North Dakota told me that spring wheat will be down in central and eastern North Dakota because of the poor price. There will likely be a 10% reduction and those acres will go to soybeans. Another manager in the northeastern part of the state said wheat acres rarely change in a "big way" in his trade area because they are needed for sugar beet rotation. "We do expect that wheat will be down a few acres and most likely will be going to soybeans. However, statewide, spring wheat acres will be more noticeably down," he told me.

As far as a start to spring planting, he told me that eastern North Dakota south of Highway 2 is not wet, and with no snow most of the winter, rivers are at low flood risk. This area expects to have a normal to a little earlier start to planting without a major weather event, but it will dry out fast without a few rains in May. North of Highway 2 is soaked, and there was water standing all summer and most of the fall. On top of that, this area received most of the snow over the winter and is at a high risk of flooding.

Pulse crops have continued to grow in western North Dakota over the last few years, and more farmers are trying them in central North Dakota. A lot of it comes at the expense of spring wheat. Pulse crops out west have been the best cash crop in that area for a few years now. A farmer in northeast Montana told me, "We have grown pulse crops on the farm for nearly 10 years now, and it all came at the expense of spring wheat. While we don't plant spring wheat anymore, we do rotate durum acres each year."

"Spring wheat will be down again I think," said Ryan Wagner, a producer from Roslyn, South Dakota. "We are basically down to the 'diehards' who grow wheat for the rotational benefits, and I would guess 70% of the acres in our area are corn/soybean rotation. The last few years have been nearly ideal for early spring wheat seeding, so if we get a little shift back to more of a normal cool-and-wet-type spring, spring wheat acres will slip even more. I would not be surprised to see USDA go with a spring wheat number at 10 million or even less next Friday (March 31)."

Another North Dakota elevator manager told me that from what he has heard, the combination of spring wheat/durum acres will be down 750,000 acres. Of that, 500,000 acres will go to soybeans, 50,000 acres to canola, 50,000 acres to sunflowers, and the remaining balance split between peas, lentils, dry beans. He told me that one more snow storm or heavy rain across northern North Dakota in the next 30 days will cause the state to likely have "upwards of 1.5 million acres of prevent plant in 2017. Not sure what prevent plant wheat pays, but take the counties of Pembina, Cavalier, Ramsey, and Rolette and you have a lot of wheat that doesn’t get planted. Now you are talking planted acres of wheat down over 1.0 million in North Dakota alone. Manitoba is in the same boat as northeastern North Dakota; wet!"

WHAT ABOUT CANADA?

"Early Agriculture and Agri-Food Canada estimates are pointing to growers increasing acres seeded to wheat (excluding durum) by 556,000 acres, or 3%, in 2017 to 17.6 million acres, while durum acres are expected to plunge by 1.2 million acres, or 20%, to 5 million acres," said DTN Canadian Grains Analyst Cliff Jamieson. This comes at a time when the United States could plant the smallest spring wheat crop since 1972, according to interviews reported by Producer.com, which could be supportive for Canadian prices when combined with the weak Canadian dollar relative to the U.S. currency.

"The Saskatchewan government's Crop Planning Guide shows durum as a profitable crop compared to many other cropping options, although pressure on prices, increasing stocks both globally and domestically, and growing challenges related to fusarium and limitations on planting seed supplies have many thinking twice. Some estimates suggest the durum acres could be reduced even further," added Jamieson.

As of week 33, or the week ending March 19, licensed exports of Canadian wheat are 18% behind last year while licensed exports of durum are 14% behind last year, both behind the government's projected pace for the crop year. Jamieson said there are a number of factors behind this, such as the late harvest and related quality challenges combined with an industry focus on moving canola. Current projections are pointing to a modest 1.7% decline in Canada's wheat stocks this crop year, while durum stocks are expected to increase by 154%, largely consisting of low-quality stocks. These projections may be in jeopardy, however, given the slower-than-expected export movement and uncertainty over the disappearance in feed channels.

"Another wildcard this spring is the potential risk of flooding, which could affect seeded acres, primarily in areas of southeastern Saskatchewan as well as Manitoba," noted Jamieson. "With many soils already saturated last fall, government maps show precipitation over the winter (Nov. 1 through March 20) to range from 115% to 150% of average. Many areas of Manitoba are facing a risk of moderate to major flooding, while spring weather will play a critical role."

An elevator manager in North Dakota summed it up as far as planting decisions for U.S. farmers: "Current prices are down the list of what makes their planting decisions. Bankers, insurance, weather, rotations and planting dates, to name a few, can all trump any price movement making decisions for them."

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

(AG/BAS)

P[L2] D[728x90] M[320x50] OOP[F] ADUNIT[] T[]

Comments

To comment, please Log In or Join our Community .