Winter Wheat – Is the Glass Half Full or Half Empty?

Jul 26, 2016

By: Paul Thoroughgood P.Ag

Many new and non-winter wheat growers often express frustration and sometimes even go as far as giving up the benefits of growing winter wheat due to marketing issues. In my experience as a long-time winter wheat grower, the benefits of having winter wheat in my rotation not only make it worth spending a little more time on marketing, but also can provide a substantial return on time invested.

Winter wheat growers are often discouraged when they see milling CWRW prices at or below feed prices, limited delivery opportunities, and CWRS prices higher than milling CWRW. I share in some of this frustration, particularly when millers and the Canadian International Grains Institute (CIGI) regularly tell us that CWRW has many positive characteristics making it a much higher-value product than what the market reflects. Despite a market that doesn’t currently recognize all the positive attributes of winter wheat, there are still opportunities to have winter wheat not only compete with other cereal alternatives, but in many instances, be your most profitable cereal.

The following are examples from my local marketplace that I hope illustrate how looking at the glass “half full” can capitalize on the economic benefits of winter wheat:

  • This past year at harvest, CWRW was highly discounted in our local marketplace with milling CWRW below feed price. 1 CWRS 13.5 was $5.91, 1 CWRW was $4.48 and feed was $4.76. On principle alone this really burns me as a winter wheat grower given the milling values of the crop. However, once I got over that, I looked beyond the elevator to a local ethanol plant. They were paying $5.25 for CWRW as it fits into the classes they pay the most for. If cash flow and/or bin space during harvest was/is one of the goals, then the ethanol price is only 13 per cent below 1 CWRS 13.5. The 20 per cent yield advantage of CWRW vs CWRS makes winter wheat the winner.
  • If cash flow isn’t an important factor in determining sale of winter wheat, since it is a relatively low-volume crop, prices will often bounce a few times in a season in response to demand. This past January was one such example where our local price for April delivery was $6.36 for a 1 CWRS and $6.32 for a1 CWRW. With prices virtually at par, and with the 20 per cent yield advantage, winter wheat once again come out on top.

I hope these examples illustrate that there is more than one way to extract the economic benefits associated with winter wheat. Many winter wheat growers intentionally target quick movement off their farm for all or part of their marketing plan. For the growers I know who employ this strategy, they are happy to see winter wheat break even with their other cereals, and any premium is a bonus. Growers who are able to hold the crop and seek market premiums can be rewarded well when price spikes occur for winter wheat versus other classes of wheat.

If your winter wheat marketing glass is half empty, I encourage you to take a deeper look. While the market may not be the one you targeted when you seeded the crop, or maybe it’s a little further away than the local elevator, there may be markets you have missed or overlooked in the past. Remember price per bushel/tonne isn’t nearly as important as net return per acre. My rule of thumb is that if my winter wheat price is within 20 to 25 per cent of my alternate cereal price then I am confident the worst I will do is break even with the alternative.

I am hopeful that in the near future winter wheat becomes a more mainstream class that is more widely accepted in the industry. CWRW competes well with U.S. HRW, which is the largest class of wheat grown in the world. To date, there has been very little focus and effort put into developing markets for CWRW. I would like to commend Winter Cereals Manitoba, Saskatchewan Winter Cereals Development Commission and Alberta Wheat Commission for investing in market development at CIGI. The more we are able to demonstrate the value of winter wheat the better chance there is that our customers will demand it.

As harvest and fall seeding approaches, I encourage those of you who aren’t currently growing winter wheat to look again. In the past few years winter wheat has consistently been one of the top-net income-earning cereals on the Prairies. While marketing may require a little more creativity than the major classes, the yield advantage combined with an earlier harvest window provides many opportunities.