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Wheat acreage outlook is grim

DEVILS LAKE, N.D. -- Erica Olson wants to be positive about wheat. But she wants to be realistic, too. "We've seen a perfect storm of ideal production for four straight years," said Olson, marketing specialist with the North Dakota Wheat Commission.

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Erica Olson, marketing specialist for the North Dakota Wheat Commission, presents in the Memorial Building gymnasium during the 2017 NDSU Extension Service Roundup in Devils Lake, N.D. on Wednesday, January 4, 2017. (Nick Nelson/Agweek)

DEVILS LAKE, N.D. - Erica Olson wants to be positive about wheat. But she wants to be realistic, too.

"We've seen a perfect storm of ideal production for four straight years," said Olson, marketing specialist with the North Dakota Wheat Commission. Though wheat consumption is at a record high and growing, "We do have a surplus of wheat" - and that's dampening the outlook for farmers who grow it.

Olson spoke Jan. 4 on the second day of the two-day Roundup farm show in Devils Lake, N.D. Speakers, primarily from the extension service, commodity groups and private companies, addressed crops, weeds, livestock, marketing, crop insurance and many other subjects.

A winter storm held down attendance on Jan. 3, but weather improved and attendance picked up Jan. 4 at Roundup, which normally draws about 700 people. Most of the attendees were from North Dakota, which typically leads the nation in production of hard red spring wheat.

Farmers generally say they like hard red wheat and want to continue growing it, but are concerned that its low prices offer too little profit potential.

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"It's not the lowest wheat prices we've ever seen, but it's the lowest wheat prices we've seen in quite a few years," Olson said.

But the outlook for hard red spring prices isn't the same as for wheat, overall.

Six classes of wheat are raised in the U.S. Hard red spring, sometimes known as the "aristocrat of wheat," is valued for its high quality and is particularly attractive to consumers interested in quality, rather than price.

"We're definitely focusing on quality buyers," Olson said of the North Dakota Wheat Commission. "We're not always selling the largest quantity anymore, but we are still the quality supplier."

Though world wheat supplies are high "and weighing on the market," the supply of high-quality wheat is tighter and is expected to tighten further, which is good for hard red spring, Olson said.

A potential upturn in investment fund activity in the futures market could help wheat futures at the Chicago Board of Trade, but is less likely to do so for futures at the Minneapolis Grain Exchange, she said.

A look at durum

North Dakota farmers also are the nation's leading producers of durum, which is used to make pasta.

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Farmers in the state generally harvested a bumper durum crop, possibility their biggest ever, in 2016. But the crop suffered serious, widespread problems with vomitoxin, which can affect flavors in food and processing performance. Though human health isn't at risk, miller try to limit vomitoxin levels, and that's led to sharp price discounts for vomitoxin-infected durum.

Canada, the world's largest durum exporter, also had a big, but vomitoxin-riddled durum crop. That raises the question of whether there's enough high-quality durum to meet demand.

For now, the grain market says, yes, there is enough, but that could change by spring, Olson said.

"These next few months will be pretty tell-tale for the durum market," she said.

Related Topics: WHEATEVENTSCROPS
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