Wheat prices are high, and weather and market factors could make the crop an attractive option for
Texas
growers coming out of a severe drought, according to a
Texas A&M AgriLife Extension Service
expert.
Mark Welch
, AgriLife Extension grain economist,
Bryan-College Station
, said uncertainty about accessibility to wheat around the globe has driven prices skyward, and emerging drought in wheat-producing areas of the
U.S.
could add to that trend. Recent rainfall across many parts of the state improved conditions for
Texas
wheat, Welch said. Some areas had adequate planting moisture following widespread August rains, but other areas remained too dry to support crop establishment or to plant.
Some producers "dusted" crops in, planting seeds into dry soil, and hoped for rain, while others waited for moisture. The recent moisture could boost plantings, seed germination and crop establishment.
Most
Texas
wheat is planted for dual-purpose - cool-season grazing and grain - or for grain production, Welch said. The value of wheat as a forage, either for grazing, hay or wheatlage, and as a grain crop could make the crop very attractive to producers this season.
Welch said planted wheat acres typically trend upward following cotton abandonment, which was widespread this year due to drought. Wheat is also a relatively flexible crop when input costs like fuel and fertilizer are high.
He said producers can plant the crop into the first part of December, let fields establish and wait until January or early February to invest money in fertilizer.
"Conditions look much better after much of the
Texas
wheat country got a drink," he said. "The moisture could boost establishment and set it up for winter, and between that potential and the market conditions, wheat could be an interesting crop for a lot of producers."
Welch said
Texas
wheat producers could have an opportunity due to high prices and uncertainty surrounding
U.S.
and global supplies.
Moisture levels worsened in other
U.S.
wheat-producing regions as they improved in
Texas
, Welch said. Large swaths of
Kansas, Oklahoma
and southeastern
Colorado
are experiencing extreme to exceptional drought, according to the
U.S.
Drought Monitor, and most fall planting windows for crop insurance in those areas have passed.
"If those areas do not get moisture, it creates a big question for
U.S.
winter wheat production, and that could mean better prices for
Texas
wheat producers," he said.
Wheat prices are already historically high, Welch said. The October cash price for
Texas
wheat is
$9
per bushel compared to the same time last year when bushel prices reached
$8
. Wheat prices hit
$11
per bushel in June, compared to
October 2019
when a bushel of
Texas
wheat was
$4
.
The pandemic impacted wheat prices to a degree, but the
Russia
-
Ukraine
conflict has been the primary factor driving wheat prices upward, Welch said. The two countries account for around 30% of global wheat production, and the uncertainty of war has weighed on the market.
Welch said news that
Russia
may not extend an agreement that allowed
Ukraine
to export wheat created a price spike in the global market and injected more uncertainty. At the same time,
Russia
is reporting a record wheat crop.
Other wheat exporting nations like
Australia
and
Canada
have also reported strong production numbers, though European production was expected to be down compared to last year. Overall, global wheat production is expected hit an all-time high in 2022.
"It's not a supply problem; it's an access problem," Welch said. "The uncertainty around exports and how grain flows are important. If the
Russia
-
Ukraine
war went away, I think wheat prices would fall significantly overnight. But the Russians control the
Black Sea
, and
Ukraine
is down on plantings and harvest. They don't have access to fields or storage facilities, and
Russia
is looking at a bumper crop. All of it ties to the uncertainty of conflict."
* * *
Original text here: https://today.tamu.edu/2022/11/03/wheat-prices-up-amid-war-expanding-drought/
