Winter wheat planting has begun and so far the planting pace is dragging. With a severe drought ravaging through the southern states producers are opting to wait and see if much needed rain develops before putting the seed in the ground. The question that needs to be asked is, “With a nice $8.62 price guarantee on a revenue crop policy will they just bite the bullet and put the crop in the ground anyway?”
“It is a matter of cash,” says Jim Shroyer extension wheat specialist with Kansas State University. With lack luster yields on the spring wheat, and failed corn crops leaving acres exposed, cash positions for producers are not where they would like to see them coming into the spring. Moisture however is the key. Jim Shroyer also says; “There is a lot more ground that could be planted to wheat. If we do get the moisture in the next month, you will see the failed acres go to wheat.”
If cash is short then crop insurance may hold the key to these acres. The winter wheat base price has been discovered on revenue crop insurance. The base price for winter wheat down in the southern plains averaged $8.62. The price average in the northern plains was $8.70, for those in our winter wheat counties. This does not affect those who are in a spring wheat county as your crop is based on what the spring wheat base price will be this coming spring.
So, here is the scenario that I believe may unfold. Even though it is dry down in the southern states it seems that producers will try to put in a wheat crop and that the final planted acres will surprise many folks by being as larger than expected. Recent numbers for the winter wheat planting in the southern states continue to proceed behind schedule with 42% planted nationally vs. 53% on average. The key states of Texas and Oklahoma are even further behind, registering planting progress numbers of 25% and 30% respectively. If they were on the normal five year average planting pace we would expect each state to be 49% planted by now. With rains in the forecast towards the end of this week and into next week it should give the planted acres a good shot and inspire producers to start putting more seed in the ground. If the wheat acres get planted and the crop makes it, it could have the potential to reduce the amount of acres that could be planted to corn or beans thus making those stocks tighter into the 2012/2013 crop year and making winter wheat stocks even larger. Time will sort out what the final yield statistics will be for the 2011/2012 crop year but for now I tend to believe that a good crop insurance level coupled with fall rains will get a lot more wheat planted than folks are counting on at the present time. If I am correct that should keep pressure on the wheat prices.