United States: Wheat prospects, demand promising

By mid-February, Southwest winter wheat prospects looked promising and the export pace for the current market year showed strength for wheat and feed grains.

“We don’t have a lot of crop condition updates now, but the drought maps for Texas, Oklahoma, and Kansas look positive, so winter wheat prospects across the Southern Plains look bright at this point,” says Texas A&M AgriLife Extension Marketing Specialist Mark Welch, College Station. “The question now is whether to produce grain or choose other options for harvesting and collecting revenue off that wheat crop.

“One of the big benefits of wheat is that if cattle prices are good, producers who run stockers can keep them on wheat longer. Those producers are now on the cusp of decision time.”

As the crop matures, producers need to finalize plans and pay close attention to crop conditions, weather outlooks, and market opportunities and challenges.

Welch said small grain producers who graze cattle should decide soon whether cattle prices are strong enough to continue grazing or if wheat prices suggest taking the crop to harvest would pay better.

“Are they willing to pay to keep stockers cattle on wheat? That’s an important consideration,” Welch said.

Small grain producers—wheat, oats, triticale, and others—have options.

“They can bale or cut for silage,” Welch said. “Depending on location, hay markets or other forage opportunities might be available. We’ve seen a silage market emerge for wheat where dairies have come in.”

Producers who have been grazing but opt to take the crop to harvest should take cattle off soon, he noted. “Timing affects potential grain yield. March 15 is a good deadline for Texas Panhandle wheat,” Welch said. “That’s when wheat starts to joint.”  Producers in other areas should consult Extension recommendations.

For silage or hay, producers have more time. “They still have to decide whether to take cattle off now but then can wait until the boot stage, maybe until it starts to head, to make the final forage or grain decision,” Welch said. “They still have time before that next decision point.”

The decision to take the crop to grain harvest will likely depend on wheat prices in the coming weeks. Export potential will play a role. “Exports will be an important component of demand to keep ending stocks down, especially if we produce a better wheat crop,” he explained.

Currently, several trade issues create wheat market uncertainty.

A major concern is production out of the Black Sea region. The Ukraine and Russia conflict plays a key role, Welch said. So does weather. “The region is also dry, and a warmer than normal winter might have accelerated wheat out of dormancy. If it is maturing faster than normal, the risk of a late Easter freeze could affect yield.

“That creates an element of uncertainty around a major area of wheat supply,” Welch said. “The combination of war, drought, and a warm winter could prompt a big move in the market.”

The U.S. is no longer the key mover in the wheat marketplace, he noted. “We are not in play as much as the Black Sea. Russia is the biggest wheat exporter, so much of our wheat price depends on exportable supplies coming out of that Black Sea region.”

Trade disruptions such as tariffs also could affect export potential.

Welch warned producers to be cautious of adding production costs late in the season.

“Controlling costs will be critical,” he said. “Fertilizer timing is important, and producers should assess dollars spent to revenue potential later in the spring.”

He recommends checking Extension fertility recommendations for specific areas. “Research indicates late applications of nitrogen don’t get the yield response producers might expect,” he said.

“Producers should get all the information they can before spending extra money. Consider yield damage versus controlling what could affect yield. Consider the cost vs yield advantage.”

Welch said the Texas AgriLife Extension Master Marketer Program, currently being offered across the state, helps producers develop marketing and risk management plans for row crop and livestock operations.

“We’re moving around the state to reach more people and more areas so producers can learn about the part of the business that’s hardest to manage.”

“We’ll be doing a cotton program in Waco in late March for a feed grains program, and we go to South Texas, Weslaco, in April for another feed grain marketing session.”

Welch said regardless of crop prospects, end-use, and potential for market disruptions, producers need a plan of action to address marketing risks.

Tags: prospects, harvest, prices, winter wheat, wheat, cattle, crop, yield, feed grains