Wheat prices tumbled Thursday as a government report showed the nation's farmers had planted winter wheat on much more of their land this season amid last year's higher prices and easing drought conditions in Kansas, Oklahoma and Texas.
Across the country, the amount of winter wheat planted for harvest in 2012 was estimated at 41.9 million acres, the National Agricultural Statistics Service reported Thursday. That is an increase of 3 percent from 2011 and up 12 percent from 2010.
At the Chicago Board of Trade, wheat for March delivery fell 36 cents to $6.05 a bushel. The longer-term impact on prices will be determined when it is clear if all those extra acres turn into increased production and whether dry conditions return in the spring when the wheat comes out of dormancy.
Kansas farmer Jerry McReynolds, who has roughly 2,300 acres now planted in winter wheat, says that like many others, he added several hundred acres at his farm near Woodston because of the good prices and because some acres were idle after other crops failed this summer.
The rain Kansas got this fall also encouraged him to plant more winter wheat, which is hardier in the face of drought.
"All those factors came together to cause us to plant more wheat and we may pay the consequences," McReynolds said. "We don't know about that _ certainly if today is an indication ... the markets are not too good today."
McReynolds, who was attending the American Farm Bureau board meeting in Honolulu, had been anxiously awaiting the government report and checked commodity market prices on his hand-held device throughout the day. "I am worried about the price of wheat because when I get home I am gonna pay for this," McReynolds said.
Farmers and agricultural analysts had anticipated that more acres would be used for winter wheat given the welcome precipitation last fall and the acres left idle after other crops failed this summer. But Kansas State University economist Dan O'Brien said most analysts had not expected that the amount of acreage planted would increase so much.
O'Brien said if farmers get adequate rain or snow, those added acres would mean more bushels come harvest that would increase supplies and could lower crop prices.
"There is a lot of uncertainty and weather trends in place that really raise the question of whether that will happen," O'Brien said. "I don't think we can say that is going to happen yet with a lot of certainty."
The La Nina weather pattern is still hanging around and that tends to mean drier conditions this spring in wheat-growing areas, he said.
Texas Panhandle wheat farmer David Cleavinger, a past president of the National Association of Wheat Growers, is in a holding pattern on what he'll do with the 1,200 acres of winter wheat he planted a bit late last fall because of the state's historic drought. Though they have gotten timely rains and some snow the past few months, the wheat plants are "really, really small" in height, he said.
"There's enough moisture for it right now, but there's no submoisture whatsoever," Cleavinger said. When the wheat comes out of dormancy, "it's going to need more moisture. We keep hoping we get an 18-inch snow storm. It will be OK if we get more rain."
As he waits, Cleavinger will be considering what to do with the wheat he ends up with: He can sell it as grain, sell it to cattle feedlots as silage made from wheat, cut it and sell it for hay at a time in Texas when there is little supply and prices are high _ as much as $250 a ton _ or let cattle graze in his fields.
"Odds of hay prices being pretty good should be an advantage for us to take it for hay rather than taking it to grain," Cleavinger said. "It all is tied back to weather and rain. So if you don't have moisture, you don't have those options."
Using his wheat for hay would be less risky, he said, because it wouldn't still be in the fields when spring storms can bring damaging hail.
Hard red winter wheat, the type used for making bread, accounts for the vast majority of the nation's winter wheat acreage. It rose 6 percent to 30.1 million planted acres.
Kansas, known as the nation's breadbasket, planted 9.5 million acres, an 8 percent jump. Texas planted 5.9 million acres, up 11 percent from a year ago. Oklahoma seeded 5.5 million acres, an 8 percent increase.
Plantings of soft red winter wheat and white winter were both down nationwide.
"What it indicates is more hard red winter wheat planted," O'Brien said. "I don't know if we can say with a lot of confidence that will necessarily result in higher production until we work our way through this spring uncertainty."
Associated Press writer Betsy Blaney in Lubbock, Texas, contributed to this report.