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Economist: Higher Wheat Acreage a Return to Normal

05:07AM Jan 14, 2011

Winter wheat is making a mini-comeback in Indiana, but how long that comeback lasts could be determined by weather and other crop opportunities, said Purdue University agricultural economist Chris Hurt.

Numbers released Wednesday (Jan. 12) by the U.S. Department of Agriculture indicated Indiana farmers planted 430,000 acres of wheat in the fall. That total is significantly higher than the 250,000 acres planted in the fall of 2009, yet did not reach the state's planted wheat acreage during fall 2008, when farmers planted 470,000 acres.
"In Indiana we had a 72 percent increase in wheat acres seeded last fall," Hurt said. "While that's a very large amount over the previous year, the 430,000 acres is fairly close to what we've seen in Indiana in recent history. Acreage for the 2010 crop was very low both because of poor economic returns on wheat and conditions that were too wet to seed wheat in late 2009."
Wheat is Indiana's No. 3 row crop by production, well behind corn and soybeans. Hoosier farmers produced just 13.8 million bushels of wheat in 2010, compared with 890 million bushels of corn and 258 million bushels of soybeans.
Indiana farmers grow soft red winter wheat, which is used in cookies and pastries. The wheat is planted in the fall and harvested the following spring or early summer.
Wheat production steadily declined in Indiana the last half of the 20th century. Through the mid-1960s, the state's farmers regularly harvested more than 1 million acres of wheat. Farmers haven't planted 1 million acres of the golden grain since 1990.
Conversely, Indiana farmers planted 5.9 million acres of corn and 5.3 million acres of soybeans in 2010.
Helping fuel last fall's renewed interest in wheat were better economics and favorable planting conditions, Hurt said.
"The price of wheat escalated in the fall of 2010 with the poor wheat production in Russia and Canada," he said. "Secondly, conditions for planting wheat improved dramatically with the early harvest of corn and soybeans, and by fall helped producers get the crop planted in a timely manner."
Cash prices for wheat are hovering at $7 per bushel. Corn is trading at a cash price of about $6 a bushel, with soybeans about $13.50 a bushel.
While $7 would seem an attractive price, wheat might not be able to compete with $6 corn, Hurt said. Farmers can produce far more bushels of corn per acre than wheat.
There also are concerns about the quality of the current wheat crop.
"The last crop condition report for the 2010 fall seeded wheat crop indicated that 25 percent of that crop was in poor or very poor condition," Hurt said. "That raises the question of whether wheat stands will be strong enough to provide good yield opportunities for the 2011 harvest.
"Those producers with wheat in poor condition do have alternatives. They could tear up that wheat crop and plant corn or soybeans this spring. That's not only an alternative but a very viable alternative economically, especially for those producers in northern Indiana counties where they usually cannot grow double-crop soybeans with a wheat crop."
Hurt said he isn't recommending that farmers give up on poor wheat crops but to consider all options before spring planting.
"Wheat is high-priced, but corn and soybeans are very high-priced," he said. "This leads to the possibility that returns may be higher to tear up existing wheat and plant to single-crop corn or soybeans this spring."
The USDA reported that nearly 41 million acres of winter wheat was planted in the United States in the fall, up 10 percent from the year before.
"That is 3.7 million more acres of winter wheat that reduces acres available for crops in much shorter supply such as corn, soybeans and cotton," Hurt said. "Thus, higher wheat acres intensifies the battle for acres this winter."