Wheat seed scarce with market prices up

There is a dearth of wheat seed across the South, and in some areas farmers are scrambling to find seed. A lot of causes are to blame, but seed dealers interviewed for this story say there are some root reasons.

The first reason is simple: most states had a reduction in certified acres of wheat. Second, Mother Nature took out another chunk of wheat seed by generally cutting yields around 15 percent across the South. Third, fields were extremely wet in Kentucky and southern Illinois, leading to disease pressure.

There were “problems with germination up there. Those problems were due to scab on the seed they'd harvested,” says Jim Craig, head of Stratton Seed in Stuttgart, Ark.

Attempting to verify this, Craig checked with the Arkansas State Plant Board, which in turn checked with the Kentucky Crop Improvement Association. To that point, every untreated sample the association had seen was averaging about 70 percent germination, says Craig. Wheat seed is normally sold only at 85 percent germination or higher.

“If scab is present on seed, it can be treated and germination will increase. The thing is, that seed has poor vigor. So a lot of farmers and dealers shied away from seed produced up there,” says Craig.

A fourth cause for lack of seed: the South Carolina and Georgia areas were extremely dry and yields were hurt from drought.

Lastly, the market has moved up considerably — wheat prices are over $1 per bushel higher than at this time last year. Consequently, farmers want to increase wheat acres and are clamoring for seed.

“In Arkansas, we're trying to go from 900,000 acres to 1.3 million to 1.5 million acres. That's in one state alone. We're trying to increase acreage with much less seed available.”

Craig has been getting calls daily from farmers and dealers looking for seed.

“We're getting calls from all over. There have been a lot of requests from Louisiana, Mississippi, Alabama, Indiana, Illinois, Missouri, Kentucky, wherever. Most dealers are sold out.

“We still have some seed, although not a lot. I think we're one of the last to have any. I know there's a dealer in South Carolina who still has some. A few months ago, we recognized what was going on and tried to get our customer base covered. We've been able to do that. But other dealers haven't.”

Farmers have been complaining about high seed costs. Craig says he's heard those complaints, but there are legitimate reasons for the price upswing.

“We started selling probably $2 to $3 less than what we're currently pricing. That was fair while we had good supply. But now we have to buy seed off the East Coast to take care of customer demand for the desired varieties. The freight from there to here is generally going to cost $1 or more. That's what has increased the price — the seed dealers aren't trying to rip anyone off.”

The East Coast dealers have realized their warehouses are emptying of wheat seed rapidly, and they may not have enough seed for their own growers.

Planting dates are of special interest this year. Illinois and Indiana farmers will quit planting wheat in late October or the first week of November. The optimum time to plant wheat in Arkansas is Oct. 15 to Nov. 15, says Craig.

“But if the weather is okay and they can get the crop in, we'll have farmers planting through the end of November. In some areas of Alabama and Georgia, they'll plant through December.”

What will happen, predicts Craig, is seed demand for Illinois and Indiana will be satisfied. Arkansas will then plant and whatever seed is left over will be sent to states in the southeast.

“The Carolinas may be the ones who ultimately get the short end of the stick,” says Craig.

The move up in wheat acres is strictly related to supply and demand. As world supply has been dwindling and prices and acreage plans have moved up.

“Soft red winter wheat (what Arkansas farmers trade in) is $3.60-something (the week of Oct. 14). In Minneapolis and Kansas City, the prices for wheat other than soft red are around $4 or better. Analysts I speak with feel that before the December — or for sure, the March — contract goes off the board, soft red winter wheat could be going for as much as $5. Next July, some analysts believe farmers will be able to book wheat, cash price, at $3.75 or better. I'm not saying they'll get that, but analysts feel that's the range.”

In the past, when farmers were getting around $2.30 for their wheat, they were looking for reasons not to plant wheat. But when prices get to around $3, ears perk up. When prices reach $3.25, interest is keen. And $3.50, says Craig, “is the magic number. When a farmer is getting that per bushel, he's going to plant all he can because he can make solid money.”

Craig says he's noticed Louisiana's interest in wheat is especially high. Because of that state's proximity to the Gulf of Mexico and ports, the basis for wheat is around 25 cents ahead of Arkansas.

“When the market made a run-up, a lot of folks down there were able to sell their wheat for $3.50 to $3.75. They've got it booked and will do well raising it.”

e-mail: [email protected].

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