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|Trend of higher wheat sowings to lift US area by 2m acres
By Agrimoney.com - Published 05/09/2012
US farmers, blessed at last by rains in many areas, are to lift winter wheat sowings for the 2013 crop, in a pattern which may be repeated through other major producing countries too.
Farmers in the US, the world's top wheat exporter, are to plant an extra 2m acres with the grain, above the 56.0m acres sown for this year's harvest, Mark Welch, grain marketing economist at Texas A&M University, said.
"If they get the rainfall, they will plant the wheat," Dr Welch told Agrimoney.com, a pattern likely to be repeated through many other northern hemisphere growing regions, through to southern Russia.
"Most fall planting areas in the northern hemisphere are not currently in one of the drought classifications," he said, comparing data from a global drought monitor, kept by University College London, with the map of major production areas.
'Optimal moisture levels'
Indeed, in Ukraine, which like the US suffered drought damage to its harvest this year, UkrAgroConsult analysts has termed surface soil moisture levels as "optimal".
Currently, Ukraine farmers are expected to sow at least 8.2m hectares with winter grains for 2013 harvest, which could represent a small fall on the 8.4m hectares last year, although growers may increase their outlay if encouraged by continuing high prices.
In Russia - where a rejection of export curbs is seen as supporting drought-hit growers' hopes of making up in higher prices what they have lost in yield - farmers are expected to sow 16.8m hectares with winter grains, up from 16.1m hectares last year.
However, in the US, there some dispute about where extra wheat area will be.
While many growers are set to react to high prices by increasing crop area, the South contains many areas too dry to support corn and soybeans, potentially more profitable alternatives, and looks set to see many acres switched from cotton, given poor profitability prospects.
Farmgate cotton prices are set to fall up to 30% in 2012-13, on US Department of Agriculture estimates.
"Our research shows that the primary correlation with what farmers plant for next year is the price they got this year," Dr Welch said.
"That seems to be the primary driver in their decision making."
Indeed, it is also a factor which, in the Midwest, may see growers stick with spring-seeded corn and soybeans - for which prices are close to record highs, unlike those for wheat - even though rains left in the trail of Hurricane Isaac have vastly improved soil moisture for autumn-sown crops, Dr Welch said.
The Midwest is home to soft red winter wheat, a lower protein type used in part in feed, and traded in Chicago.
At Allendale, Paul Georgy, the broker's president, said that the 3-5 inches of rain received on many farmers had been "a supportive factor for soft red winter wheat" sowings, but adding that he did "not expect a large increase in area".
In part, this thinking is based on crops' relative prices, with wheat's returns likely "not looking real impressive" compared with those from growing corn and soybeans.
However, there is an agronomic factor too, another hangover from this year's drought for growers seeking to sow wheat, as often done, as a follow-on crop from soybeans.
"There is a concern that some winter wheat growers have that the chemicals, herbicides used for soybeans, there has not been enough rain to break them down."
And these weedkillers could be fatal to wheat seedlings.
Seed market signal
Yet there is some evidence that many soft red winter wheat growers do not hold these fears.
"Seed retailers are saying they have sold more soft red winter wheat seed than last year," Dan Cekander, director of grain market analysis at broker Newedge, said.
Soft red winter wheat acres "will be higher", he said, supported in part by double cropping with soybeans – in which growers plant a follow-on crop of soybeans after the wheat is harvested.
While coming with a yield penalty on soybeans, this strategy offers farmers a chance to tap elevated prices of both crops, and exploit rains which have done a "good deal to rebuild soil moisture".
"Illinois had more than three inches of rain – there is not a puddle anywhere. It just soaked in."
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