For the second year straight, Arkansas’ winter wheat farmers have set a state average yield record, getting 63 bushels per acre in 2014, 1 bushel per acre above the previous record, according to the National Agricultural Statistics Service.
NASS released its annual “Small Grains,” summary on Sept. 30. The report showed Arkansas harvested 395,000 acres with total production at 24.89 million bushels — about 5 percent of the total soft red wheat production in the United States. Soft red wheat is commonly used in baked goods.
“Considering the year we had, the yield is a pleasant surprise,” said Jason Kelley, Extension wheat and small grains agronomist for the University of Arkansas System Division of Agriculture. “It was a challenging year, especially at harvest time, with all the rainfall just prior to and during the harvest.”
Decisions for 2015
Winter wheat planting is in its early stages, with just 2 percent planted, and will be harvested next June. Now is the time growers are making decisions about next year’s crop. It’s during these commodity cusps that the phones begin ringing in Kelley’s and Scott Stiles’ offices. Stiles is an Arkansas Extension economist.
Both said that despite the big yield numbers, there is much uncertainty among farmers where wheat is concerned.
“Consensus is that acreage is going to take a sharp cut, not just in Arkansas, but also around the South. It could drop 30 percent or could be a little bit more,” Stiles said. “The reason is the sharp drop in grain prices. It has the growers’ attention.”
Stiles said wheat growers make their planting decisions based on the Chicago Mercantile Exchange July futures contract.
“The July contract settled today (Sept. 30) at $5.04 a bushel,” he said. “Like corn, soybeans, and rice, wheat futures are now well off the 2014 highs made earlier this year. The July 2015 contract traded as high as $7.62 on May 9.”
Setting sights lower
After accounting for basis — the difference between cash and futures prices — growers are plugging-in new crop wheat bids that are more realistically in the range of $4.70 to $4.85.
“The July contract has not traded this low since 2010,” Stiles said. “In response, we’re likely to see wheat acres decline sharply this fall. A reduction of 30 percent or so wouldn’t be a surprise even under favorable planting conditions. That equates to around 325,000 planted acres.”