Wheat harvest in southwestern Ontario was a welcome diversion for me this past week. It’s been two years since I drove my big green monster of a combine through the amber waves of grain as last year the wheat didn’t make it over winter. Wheat is one of the only crops that we expose to four different seasons and as I’ve often said before, you can lose it on the grading table after driving it to the elevator.
My 2018 wheat, from what I can remember, was planted late and had a rough go going into winter. That resulted in a very average crop in 2018, but so far in 2020, the crop is above average. This was after it was planted October 18th, which I consider on the late side, but it goes to show, sometimes weather can hurt you and sometimes it can help. Rain came overnight, so it’ll be a few days before I get to finish.
Prices for SRW wheat as I write this are approximately $6.50 and have been very volatile over the last several weeks. SRW wheat is in short supply and wheat plantings continue to lag across North America. There might be wheat everywhere, but there is less and less of it grown here. Needless to say, with the help of the lower Canadian dollar Ontario farmers have had the opportunity to sell into this market at $7 plus per bushel.
Where will the price of SRW wheat go next? Of course, the answer to that is nobody knows. Wheat might be the cockroach of grains, but management of the crop has helped make it more relevant to me. Where once a long time ago, I put nitrogen on the wheat and hoped for the best, now it gets two fungicide treatments plus Nitrogen dialed in for accuracy. Some guys split nitrogen applications. It has resulted in better wheat yields and better profits. However, wheat, still has four seasons of risk and sometimes, like 2019, it’s just a memory.
Those risks are high especially when you consider a Canadian winter. For instance, one reason my 2018 wheat crop wasn’t so good was because it came out of the 2017 winter pretty marked up. However, I wanted to do some summer tiling in 2018 so I kept the wheat. Needless to say, not everybody will do that and increasingly even in southwestern Ontario, there are farmers who take a pass on wheat. That North American trend on wheat acres doesn’t lie.
Consumption doesn’t lie either. Simply put, as Canadians we eat wheat products but nothing like the Egyptians who lead the world in per capita wheat consumption. SRW wheat grown in Ontario is processed into cakes, pastry, cereal, crackers and fillings. I know we all like those things but eating more of it would do our wheat market good. Egypt is the leading importer of wheat in the world and not by a little bit. I once asked an American official why that was, and he went on to tell me how Egyptian households consume wheat products. It was hard to fathom, with much of that wheat coming from the black sea regions.
A weird addendum to wheat harvest this year is my big green combine. It’s now black, covered with black dust apparently called Alternaria. It is caked thick on the grain table and apparently had no impact on yield. My green John Deere combine now resembles a black Fendt. A good wash post wheat harvest will surely be in the works.
Wheat producers got a boost on July 16 when Ontario Premier Doug Ford announced a $50 increase in the RMP (Ontario Risk Management Program) for the 2020 year bringing that government’s contribution up to $150 million annually. That’s a good thing for Ontario wheat producers, something I’ve written about for decades. The continued lack of a contribution to this program from the federal government continues to be a sore point. As I’ve said continually for years, its needed instead of the wasteful inept program called Agristbility, which was previously called CAIS.
The question is for wheat not sold, do you hold or let it go off the combine? The default per usual is nobody knows, but Ontario producers like flat prices, especially with a dollar dancing around the 74 cent US level. Chicago wheat futures hit a 2-month high on July 15th, rising 24 cents on the day, only to drop back 15 on July 16th. The run up was attributed to noncommercials covering their short positions put on in late June when the contract hit contract lows.
So, pick your profitable price, wheat the cockroach of grains, is so hard to discern. The world is awash in wheat, but different wheat classes have different supply and demand scenarios which make it interesting. Good luck with the rest of harvest. In another 8 weeks, we’ll be back at it in Ontario planting wheat. It’s become a habit for many farmers here. The hard part is getting a good crop and marketing it profitably.