The Winter Wheat Market

Sep 19, 2016

What is the winter wheat market looking like this year? Thoughts from Jonathon Driedger, market analyst for FarmLink Marketing Solutions.

By John Dietz

When you look at the winter wheat market, it’s about more than price per bushel. One needs to look at yield as well as price, according to Jonathon Driedger, market analyst for FarmLink Marketing Solutions, Winnipeg.

“We ask our farm clients, what is a reasonable price expectation for winter wheat as compared to spring wheat? Then we look at the yield differential,” Driedger says.

“Winter wheat will yield more than spring wheat, particularly hard red spring wheat, and by considerable margins in some cases. Then, growers can accept a lower price per bushel. More bushels an acre can translate into a higher return per acre,” he says.

Winter wheat almost always trades at a discount to good quality hard red spring wheat.

Discount, like price, will ebb and flow. It might be a dollar a bushel or more. It also could be as little as 25 cents a bushel.

The price spread is driven by both global and local supply/demand factors. The wider supply/demand factors driving discounts are in place typically for several months or even most of the crop year. Some seasonality can be caused by factors like domestic feed demand.

“A fair portion of winter wheat grown on the Prairies goes to the feed grain market. At times, if that market is very strong and if there’s not a shortage of high quality wheat, you could see the spread narrow to as low as 25 cents a bushel,” he says.

Yield differences also can vary quite a bit.

Driedger says, “For example, the Red River Valley often grows 65 to 70 bushels per acre of hard red spring wheat. They might get close to 100 bushel-per-acre winter wheat. That’s not unheard of. But, that’s just one region. Ask your agronomist what to expect in your region. That yield difference, too, will vary by year and by region.”

How to sell

First, make sure you have a good representative sample of your crop so you know exactly what you’re dealing with.

Second, while it’s common for your elevator to offer the best price on any given day, we strongly encourage being in contact with independent brokers to make sure you don’t miss pricing opportunities that may be better than the elevator offers. This is pretty common.

Driedger says, “With winter wheat, in this situation, cash grain brokers can be really useful. They can sell into feed channels for cash prices as well as other markets. Brokers find pricing opportunities because they talk to dealers and feedlots that a farmer might never access.”