US Soft Red Winter Wheat Planting Hits Delay, May Drop 20%

U.S. producers are expected to reduce plantings of the variety of wheat used to make pastries and snack foods by 18% to 20% from last year due to weather delays and weak cash prices. Last year, producers planted about 8.3 million acres of the variety, soft red winter wheat, which is grown in the central third of the country. Total winter wheat seedings last year were about 43.3 million acres. This year, wet weather that has slowed the U.S. corn and soy harvests has delayed SRW wheat planting. Many producers seed SRW wheat after soybeans in the Midwest and South but could not plant wheat until the soybeans were harvested and the ground dried up.

Late planting can result in lower yields at harvest time, especially if the crop runs into unfavorable weather. With that in mind, some producers who faced planting delays have decided to give up on wheat, analysts said.

JP Morgan analyst Lewis Hagedorn said he expected SRW wheat plantings to decline 1.5 million acres, or about 18%, from last year. Newedge USA analyst Dan Cekander projected acres will decline 1.7 million acres, or 20%.

“They couldn’t get it planted, even if they had intended,” Cekander said Monday.

Dan Manternach, agriculture services director for Doane Advisory Services, estimated SRW wheat acres will fall 20% or more from last year. Farmers have been inquiring about their options regarding prevented-planting insurance, he said.

Prevented planting is a failure to seed an insured crop by a preset final planting date or during a late planting period specified in a crop insurance policy. The final planting date has already passed in many parts of the Midwest and is approaching in the South.

“It just makes more sense economically to go that way,” he said about taking prevented-planting payments. “The incentive for double-cropping soybeans behind wheat doesn’t look as good as for growing full-season beans right now.”

In Illinois, the final planting date for SRW wheat passed last month, said Gary Schnitkey, professor of agricultural economics at the University of Illinois at Urbana-Champaign. It's likely that “many farmers will find (prevented planting) an economical alternative” to seeding a late crop, he said.

If a farmer was unable to plant wheat before the final date because of an insurable cause, he can choose to take a prevented-planting payment and not plant wheat. Delayed harvests of soybeans or other crops are not insurable causes, crop specialists said. Wheat plantings must have been prevented because rain and moisture kept farmers out of their fields, they said.

In Arkansas, the final planting date for crop insurance is Nov. 30. There is a five-day late-planting period for wheat after that, but insurance guarantees are lowered when wheat is planted after the final date, said Jason Kelley, wheat and feed grains extension agronomist at the University of Arkansas Cooperative Extension Service.

Sid Love, analyst for Kropf & Love Consulting, said he had heard estimates for total winter wheat acres to drop 1.5 million to 2 million acres and for SRW wheat plantings to fall 1 million to 1.5 million. That would result in a roughly 3% to 5% drop for all winter wheat acres and a 12% to 18% drop for SRW wheat acres.

“I wouldn’t argue with that because I’m in that camp too,” Love said about the estimates. “It was a combination of weather and vomitoxin and real, real low prices for cash soft red.”

The 2009-10 SRW wheat crop suffered quality problems, including high levels of vomitoxin, a fungal byproduct that can sicken humans and animals if ingested. Producers have to sell wheat infected with high levels of vomitoxin at a discount and sometimes can’t sell it at all, depending on the extent of the problem. Growers also have struggled to find a home for wheat on the export market due to large world supplies and stiff competition from other countries.

Plantings of hard red winter wheat, grown in the U.S. Plains and used to make bread, are expected to stay much more stable from last year. HRW wheat producers did not face the same planting delays as SRW wheat producers and have fewer options of other crops to plant. Many SRW wheat growers can plant corn or soybeans if they don’t seed wheat.

Source: CME Group