In places such as the southern Plains, producers could opt to reduce wheat acres from 10% to 20% amid low prices, predicts Angie Setzer of Citizens Grain. For prices to move higher, she says, buyers will need to have an incentive to reenter the arena.
“In the southern Plains area, I wouldn’t be the least bit surprised to see 10% to 20% of acres cut. I haven’t talked myself to growers to see,” Setzer tells Tyne Morgan on the “AgDay” Agribusiness Update for Tuesday, Sept. 6, 2016. “I know a lot of my growers in the Michigan area are really wondering what the heck they planted wheat for and are in no hurry to plant it again. I think there could be some conversations of 10% to 20%. Of course, that feeds into what do we do next spring because that gives you some more in the acreage pie when it comes down to it. Maybe what’s bullish wheat may not be good for corn or soybeans. But overall, these guys that are sub-$3 wheat are not going to be in a big hurry to put more in the ground.”
That possibility comes just a couple of weeks after wheat prices put in a 10-year low. At this point, Setzer says, more buyer interest is the one sure thing that can drive prices higher.
Looking ahead to the next growing season, geopolitical issues tied to wheat production might be supportive for U.S. producers.
“There are already discussions of crop shortages possible in the European Union—France, Germany, Poland, areas like that—everyone keeps saying that the Russia-Ukraine wheat crop’s going to make up for it,” Setzer says. “When it comes down to it, I think could be some issues with some geopolitical tension. That could start to play a role into it. Then of course the million-dollar question is, are we going to see [producers] plant wheat this year? I think when it comes down to it, you’re going to see a lot of discussion about wheat acres dropping, and that could be enough to get these funds back in.”
Watch the complete “AgDay” interview with Setzer below.