Winter canola could be an attractive alternative to wheat for teh 201617 marketing season

Winter canola could be an attractive alternative to wheat for teh 2016/17 marketing season

Texas wheat plantings could drop 20 percent

Wheat acreage will be down in 2016/17 Graze out could be best option Consider canola

Texas planted wheat acreage could decrease by as much 10 percent to 20 percent this fall, on top of a 13 percent reduction last year, and harvested acreage likely will be even less, says Texas A&M AgriLife Extension state small grains specialist Clark Neely.

Neely says wheat producers will be looking for ways to decrease production costs—with minimal effect on yield and quality—and will consider grazing out cattle instead of producing grain. Alternative crops, especially canola, also may be good options.

“I think we will certainly see a further reduction of wheat acres in 2017 over the 13 percent reduction we already saw in 2016,” Neely says. “With the basis in some areas putting prices below $3 a bushel, it is nearly impossible to make wheat pencil out.”

Farmers seem to agree. “From the discussions I’ve had with producers and clientele across the state, no one is excited to plant more acres of wheat, and it wouldn’t surprise me if we saw a 10 percent to 20 percent reduction of acres in Texas, similar to what they are forecasting for the U.S. as a whole. And even if we don’t see a significant reduction in planted acres (which I think we will), we will likely see a reduction in harvested acres as more farmers opt to graze out wheat instead of taken it to grain. There just isn’t much in the market to help support a price increase right now.”

LOOK FOR SAVINGS

Neely says producers will look for cost savings and any opportunity to make even a small profit from wheat. Cattle may be the best bet.

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“As far as recommended practices in this tough time for wheat prices, I think if producers have the option to include cattle in their system and graze their wheat, it may be to their advantage.”

For those who want to produce grain, he offers these tips:

  • Plant resistant varieties to help reduce input costs such as insecticides or fungicides, and boost yields.
  • Consider, in some regions, cutting back on planting rates to reduce seed costs. “In many areas of the Blacklands, for instance, it is common to see seeding rates of 90, 100 or more bushels per acre. Trials we’ve done in the past show it doesn’t need to go that high if planting strictly for grain production.
  • Band fertilizer. “Research shows that producers can cut phosphorus rates by roughly half and maintain the same yields if they band instead of broadcasting.”
  • Soil sampling can save money. “By taking soil samples and putting a small amount of input costs in up front, producers may credit nutrients already in their soils and possibly save a substantial amount in fertilizer costs on the back end.

CANOLA OPTION

An alternative crop is another possibility. “I think this would be an excellent time to try canola as an alternative crop, Neely says. “Prices for canola have remained consistently above $7a bushel over the past year, and peaked over $8 around harvest time. Even though we typically only see about 80 percent of wheat yield with canola, I think producers will see that the chances of turning a profit in the upcoming season are much higher with canola than with wheat right now.”

The rotation effect aids future wheat crops.  “We often see yield advantages in wheat following canola in a rotation, especially in systems that are primarily dominated by wheat.”

Timing of canola harvest offers an advantage over wheat, too. “The North American canola market is dominated by Canada, which grows spring canola. Spring canola is harvested in the late summer or fall. In the southern Great Plains, we grow winter canola, which is harvested in late spring or early summer. This gives us a price advantage as we are harvesting when prices typically peak.”

Neely says producers can get more information about canola production through ADM in Lubbock—the sole crushing facility in Texas, where most of the state’s canola crop goes.

The burdensome global supply of wheat will keep a lid on wheat markets for the 2016/17 marketing year, according to industry observers—unless a weather or other catastrophe occurs in a major production area. Producers have no control over such events. The best they can do, say Neely and other production and marketing specialists, is to manage costs the best they can, consider enterprise mixes and try to weather what Oklahoma State University economist Kim Anderson refers to as a “perfect storm,’ in the wheat market.

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