Wheat Farmers Weigh Planting, Profitability

April 13, 2016 03:53 PM

With sagging prices and abundant global stocks, U.S. wheat growers are shying away from planting wheat. 

USDA’s prospective plantings forecast put all-wheat acres at 49.6 million acres. That’s a 9% drop-off from last year, as you can see in the graphic below. 

To put it into perspective, the U.S. has not planted below 50 million wheat acres in over four decades. You have to go back to 1970 and 1971, when the U.S. planted 48.7 million. To break it down further, winter wheat is down 8% at just over 36 million acres. Kansas is down 700,000 acres; Oklahoma 300,000 acres, and Texas planted one million fewer winter wheat acres.

The challenge isn’t lost on the wheat industry, which is already taking steps to replant its future in hopes of building farmer interest.

It has been several years since Idaho farmer Wayne Hurst turned over his hayfield. “I decided I better dig it up,” Hurst says.

Prices for hay might be down, but even so this former wheat grower president says replacing those acres with wheat isn’t a given. “Everyone knows crop prices are down, and frankly all winter long a lot of us have been looking for something that will make us a little bit of money,” Hurst says. “Wheat will make us a little bit of money, but the margins are tight.”

He’s not alone—many wheat analysts say putting seed in the ground in 2016 takes a sharp pencil.

“Right now we’ve got market analysts saying we’re going to have a new normal around $3.75 to $4.25,” says Kim Anderson, Oklahoma State University Cooperative Extension emeritus grain marketing specialist. “I don’t think so because I don’t think nitrogen and input costs are going to come down so that the cost of production is less than $3.75 per bushel.”

Right now Anderson sees prices leveling out between $5.00 and $5.50. “We’re not going to produce wheat if we don’t make a profit doing it,” Anderson adds.

Profits are part of the reason wheat growers are shifting acres into other crops. “We really need to increase productivity and profitability per acre,” Hurst says. “We’re losing acres to other crops.  We farmers are going to plant what we can make a living" growing and selling.

Those attitudes are pushing the country’s wheat growers to do better. Wheat organizations continue to build a new business plan for the wheat industry, focusing on yields, research technology and market development.

They’re also rolling out a national wheat yield contest in 2016. “It really allows wheat farmers across the United States to really come together and really share their knowledge of what’s working for them and what’s successful for them,” says Kevin Hodges, wheat operations lead for Monsanto’s Westbred Wheat.

Companies like Westbred say they’re also trying to help farmers drive up yields, from using microbial seed treatments to optimizing seeding rates.“We see seeds size vary where we have very large seed and very small,” Hodges says. “So we have the risk of over-planting and risk of being under-planted.”

While corn and soybean growers have had biotechnology to push their crops' productivity curve, wheat growers have yet to see similar traits in their seeds.

“It's tough to convince people that we need a GMO variety if it’s only bringing agronomic benefit," says Dan Dye, CEO of Ardent Mills, who says a GM wheat that benefits consumers might be an easier sell to the public.

Some wheat growers' profitability problems might be solved by consumers and the growing demand for organic products, which can command higher prices. Currently only 1% of U.S. wheat acres are organic, according to Dye.

“In generally, you’re more than doubling the price of wheat,” Dye says. “There’s a process to (become) certified organic, but there are significant price premiums for organic wheat versus conventional today.”

In the meantime, growers like Wayne are growing what makes the financial sense. 

He still plans to put in spring wheat, and his state of Idaho does expect a slight increase in 2016, up 20,000 acres.

In Montana, though, the forecast is for 450,000 fewer acres of spring wheat than 2015, and in North Dakota, farmers expect to plant one million fewer acres of spring wheat this year.

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Spell Check

lon peterson
cut bank, MT
4/13/2016 08:27 AM

  why would we need to increase production? Don't you guys realize what causes low prices? We obviously can produce enough with what we have, the controversy of gross is not needed in the realm of wheat. Produce twice as much and your price is half as much. We all need to take a year to produce wheat minimally. you can go broke "feeding the world"!!!

Kyle Fellerman
Greenfield, IN
4/18/2016 06:48 AM

  I agree Monsanto made growing soybeans easier but we lost the freedom to save seed now the seed companies don't want to lower the price of seed and the seed guys were on vacation posting pictures for spring break and I was working another job wondering if we we could pay the bills

Harrisburg, NE
4/17/2016 08:26 PM

  Alternative crops in the high plains are very limited. Most producers do not have row crop equipment. This creates a major problem in that to add many crops to the mix will require taking on additional debt to acquire specialized machinery. Do you really want to take on additional debt? Seed costs another issue as are additional fertilizer and production costs. Then you have to look in the crystal ball and find a market for the alternative crop that will allow you to make a profit. Maybe CRP is better.


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