Farmers in central and eastern Kansas may plant soybeans after harvesting winter wheat because the price spread between the commodities is the widest in at least 20 years, said Tom Leffler, owner of Leffler Commodities LLC.
Wheat futures on the Kansas City Board of Trade were at an $8.52 discount to soybeans on the Chicago Board of Trade, the widest since at least 1992, Bloomberg data show. Farmers who are going to collect wheat two or three weeks early in Kansas may then seed soybeans, said Leffler, who’s based in Augusta, Kansas.
Soybeans in Chicago have surged to the highest level since 2008 this year after dry weather in South America curbed supplies, boosting overseas demand for shipments from the U.S. The rally may encourage U.S. farmers to boost acres, prompting a slump in prices, Hackett Financial Advisors LLC said last week.
“There are going to be a lot of” soybeans planted after the wheat harvest, Leffler said in an interview during the Wheat Quality Council’s tour of Kansas fields today. “The early harvest gives you the advantage of getting it in. And the economics make sense.”
Wheat futures for July delivery on the Kansas City Board of Trade were at $6.3125 a bushel, while soybeans for delivery the same month on the Chicago Board of Trade were little changed at $14.8325 at 7:48 p.m. central time.
More farmers than usual in Kansas would look at the opportunity of planting soybeans this year, said Jim Shroyer an agronomist at Kansas State University in Manhattan, without estimating the additional acres that the crop may get this summer. It’s too early to tell, Shroyer said.
Farmers in Kansas, the biggest U.S. producer of winter wheat, are expected to harvest crops as much as three weeks early after warm weather and timely rain accelerated plant development, according to the Wheat Quality Council.
Wheat farmers in central and southwestern Kansas are forecast to harvest 48.5 bushels an acre this year, council data show. The record for the state is 49 bushels an acre in 1998, according to the U.S. Department of Agriculture.
The crop probably won’t be a record this year because of damage to plants from fungal diseases and dry weather in western counties, said Ben Handcock, the executive vice president of the Pierre, South Dakota-based council.
Some growers in northern Oklahoma also may plant soybeans after collecting wheat because of the price gap and the early harvest, said Mark Hodges, the executive director of Plains Grains Inc. in Stillwater, Oklahoma. As much as twice the normal amount of precipitation has fallen in northern Oklahoma in the past six months, National Weather Service data show.
“It’s possible in north and northeast” counties in the state, Hodges said. “Knowing they have a full profile of moisture, why not try to take advantage of it?”