The state of 2011 Great Plains crop and livestock production was all too apparent during a drive from the Texas Panhandle to north-central Nebraska late last week. Drought-stricken, heavily parched, non-producing land yielded to acre-after-acre of lush corn and soybeans ready to bust bins if perfect weather continues.
The drive by your eWheat editor, as sick of southern-plains century-mark temperatures as any, brought to life drought-illustrating weather maps seen all year that virtually split the country into a brown and green nation. As rivers and streams remained filled up north, wildfires flared up again in Oklahoma and Texas, destroying hundreds of rural and urban homes. The big storms, Irene and Lee, brought welcomed rainfall to many regions, but not without flooding many others.
Southern farmers and ranchers are ready to plant winter wheat. But lack of soil moisture will prevent it for many eager to get forage started for fall grazing in regions scraping to keep cattle herds intact and keep from paying astronomical prices for hay that’s flourishing in regions from northern Kansas on up.
Meanwhile, strong wheat prices are providing early marketing opportunities for 2012 – if there is a crop to sell. It comes down to some sort of crop insurance or crop protection program, says Kim Anderson, Oklahoma State University Extension crop marketing specialist. “The single most important step in marketing 2012 wheat may be purchasing crop insurance,” Anderson says, noting that Oklahoma, Texas, the southern half of Kansas and southeastern Colorado are all suffering severe drought.
“The long-term forecast indicates that the drought will continue. Crop insurance rates will not be available until about Sept. 15. The insured price will be the average of the Kansas City Board of Trade (KCBT) July wheat contract daily close for the Aug. 15 through Sept. 14 time period.
“One note on prevented planting (under the federal farm program),” Anderson adds. “Word has it that USDA’s Risk Management Agency will not accept dry conditions as a reason for prevented planting. This implies that wheat must be ‘dusted-in’ by the final planting date.”
Spring wheat isn’t living up to expectations for some, says Mark Welch, Texas AgriLife Extension economist, noting that last week’s USDA Crop Progress reportshowed further declines in the spring wheat crop condition. “With harvest now about 50% complete, yields to this point have been disappointing, adding to price support for wheat,” he says.
Welch adds that globally, projected wheat supplies are on the rise, pointing out that the International Grains Council’s Grain Market Report shows another increase in 2011-2012 production. While projected use is still above production, that gap has been narrowing all summer. The projected world stocks-to-use ratio is still lower than last year’s 29.3%, but has risen from 27.3% to 28.2% over the last four months.
U.S. wheat exports are facing increased competition in world markets as evidenced by the export sales commitments in the 2011-2012 marketing year, Welch says. “In a normal year, a third of the yearly sales would be on the books by the end of August, this year it’s only 20%,” he says. “On average, over half of the sales for the year occur in the first four months.”
Anderson says “farmers everywhere in the world” react to high wheat prices by increasing planted acres. If the weather cooperates, wheat production for the 2012-2013 marketing year will be above average and 2012-2013 prices will be lower than current prices.
“Hard red winter producers in the southern plains need to insure production and income first,” he says. “Because of yield uncertainty, price will probably not be a factor until a few months before harvest or when the wheat is in the bin.”
As cooler temperatures finally eased at least one part of the weather problem in the southern plains, farmers were at least more upbeat about chances for getting the next crop in the ground. Hopefully, rainfall will follow and bring production conditions back to normal, or at least what used to be normal.