Economics show Oklahoma wheat growers must maximize yields and protein content in their crop

Wednesday, November 8, 2017

It is no secret wheat prices have been less than stellar overall in recent years, but that only underscores the need for wheat growers to do what they can to produce as competitive a product as possible.

For example, go back a few decades and the relative difference between Oklahoma wheat and Russian wheat was essentially no difference at all: a little more than 30 bushels per acre being the norm. Since that time, Oklahoma wheat has remained essentially unchanged while Russian wheat has enhanced its performance to about 50 bushels per acre with better protein content.

“By staying the same Oklahoma wheat has essentially lost ground over the decades, meaning state wheat producers need to be doing all they can to improve both quality and quantity,” said Kim Anderson, Oklahoma State University Cooperative Extension grain marketing specialist.

The Kansas City July contract placed against the basis yields indicated a price of about $4 or perhaps slightly less for producers' 2018 wheat crop. However, Anderson contends the right management decisions made during the growing season could potentially demand $5 wheat come harvest.

“The world is awash with wheat right now and the demand for high-quality protein is high,” Anderson said. “If producers can grow a crop that delivers on both good protein and high test weight, the price paid to them will go up.”

While it is true analysts expect planted acres of hard red winter wheat in Oklahoma to decrease compared to last year, price support is a bit more complicated than that. Some early estimates put total acreage at about 5 percent to 10 percent less than last year, somewhere around 4 million acres, the lowest total since 1942.

Nationally, there has been a declining interest in planting winter wheat. The crop seeded for the 2017 harvest nationally was down 24 percent from five years before. Furthermore, the acreage decline has been increasing over the last several years. The acreage decline between 2014 and 2015 was 6.4 percent, between 2015 and 2016 it was 8.9 percent and between 2016 and 2017 it was 9.6 percent. Furthermore, acreage decline does not necessarily mean production decline. The crop harvested in 2016 had record-smashing yields and was the largest since 2008.

“Some people hear acreage decrease in the United States and automatically think less supply, but the world of wheat is very much a global marketplace,” Anderson said. “The big problem lies across the Atlantic, meaning Russia and the Ukraine. These former Soviet Union states have produced nearly 3 billion bushels of high-quality wheat with protein content at 12.4 percent, on average.”

Anderson added these countries are cornering the protein market and absorbing export market sales from the European Union, Australia, Argentina and, yes, even the United States.

Milling operations in Oklahoma historically have had to import wheat in from northern states such as the Dakotas and mix that wheat flour with what is produced in Oklahoma to increase the protein content of their supplies.

Troy Rigel of Farmers Grain Company said they and other grain elevators may pay a premium for protein above the 11 percent typically seen in Oklahoma wheat, but elevators also may apply a price deduction for wheat with protein content less than 11 percent.

“It’s tough to sell 11 percent protein wheat,” he said. “The biggest consideration determining if a grain elevator will pay a premium for extra protein in delivered wheat is whether or not the elevator is able to test the wheat as it comes in and then segregate the grain accordingly.”

Often, Rigel said, it just depends on the specific grain elevator in question. Farmers Grain Company is a full-service multi-faceted agricultural cooperative with 14 locations in north-central Oklahoma and south-central Kansas. “The more antiquated the grain elevator is, the less likely premiums for protein content will be paid. It is a matter of available resources.”

Agronomic practices are available to boost wheat grain protein without sacrificing yield. First, make sure to select appropriate varieties for specific Oklahoma growing conditions. The six most popular hard red winter wheat varieties planted for the 2016-2017 growing season were all developed by the OSU Division of Agricultural Sciences and Natural Resources’ Wheat Improvement Team:
1. Gallagher at 20.5 percent of acres planted;
2. Duster at 5.7 percent of acres planted;
3. Endurance at 5.7 percent of acres planted;
4. Iba at 4.7 percent of acres planted;
5. Ruby Lee at 4 percent of acres planted; and
6. Doublestop CL Plus at 3.6 percent of acres planted;

“OSU-developed wheat varieties accounted for nearly half of the total wheat acres planted in the state last year,” said David Marburger, OSU Cooperative Extension small grains specialist. “These varieties are bred specifically for the region and possess enhanced traits relative to drought, disease and insect resistance while producing good yields, improved protein content and high-quality baking and milling characteristics.”

Other recommended best management practices include producers knowing residual soil and crop nitrogen status, selecting an appropriate pre-plant and in-season nitrogen rate, utilizing effective weed controls and using fertilization practices that minimize nitrogen losses, among others.

“Best management practices should result in maximizing wheat grain yield potential, as well as providing an acceptable level of protein content, say 11.5 percent at the very least,” Marburger said. “For nitrogen fertilizer management, these practices can help ensure producers are maximizing returns on their nitrogen fertilizer investment into the crop, ensuring less money is spent on unused nitrogen fertilizer which can be lost multiple ways.”

OSU Extension fact sheets detailing a number of best management practices relative to wheat production in Oklahoma are available online at http://osufacts.okstate.edu. Additional assistance is available through OSU Cooperative Extension county offices, typically listed under “County Government” in local directories.