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Under the Agridome
Philip Shaw 7/18 8:02 AM
This week I found myself behind the wheel of a combine going through my soft red winter wheat. It's that time of year again when Ontario farmers get into harvesting their wheat fields. Wheat is always a little bit of a pariah, with a reputation of sometimes being called the cockroach of grains. It is the only crop that many of us in this part of the country submit to four different seasons of risk. When that's over, we drive it to the elevator, and we can lose the crop again on the grading table. Wheat always seems to hold surprises, some of which is not the most pleasant. Of course, we always have to watch the weather with wheat, as rain showers always present challenges. So far this year, I've been lucky as my wheat crop is one of the better ones I've ever had; I only hope Mother Nature gives me an opportunity to finish what I started. Wheat is also used in rotation with other crops in southwestern Ontario. In my own case, wheat is almost necessary as a soil conditioner for my very heavy clay soils. Generally speaking, the yield response for corn and soybeans with wheat in the rotation is very positive. The only exception I had to that was this year, where my soybeans planted on wheat ground have not fared very well because of heavy rains this past spring. However, generally speaking, wheat is a good thing in the rotation here in southwestern Ontario, despite its moniker as "poverty grass". The poverty grass thing comes from current low prices. The Chicago soft winter wheat contract is not near the contract low, but it is close -- as of this writing, at $5.33 futures prices. For wheat off the combine in Ontario, it's about $6.10 a bushel, not the heady prices we saw when the Russians bombed Ukraine three years ago and put wheat prices almost to $15 a bushel. Keep in mind that is an anomaly. Wheat is grown almost everywhere, and any supply gap is quickly filled. Wheat prices are low at the best of times. The wheat is part of the agricultural efficiency vicious cycle: when you have low prices, you produce even more of it. For instance, Ontario has quite a good reputation when it comes to wheat yields, with last year being just under 100 bushels per acre. Over time, through the work of government, private and producer industry groups, we have seen wheat yields increase. I continue to work on that, a considerable struggle I have found. However, I will keep trying. One possible avenue for better Ontario wheat prices is to get more of a value-added component into our domestic wheat market. We have done that with Ontario corn with about 33% of the corn grown going to ethanol, which in turn gives us higher corn prices. In many ways you would think with wheat it would be easier to achieve those value-added gains, but it never has been. One thing that would help is if Ontario consumers ate wheat at a higher rate of consumption like the peoples of North Africa. People there in places like Egypt have a huge wheat consumption. Somehow here in Ontario we will need to figure that out. As it is, about 57% of Ontario wheat is used domestically in Canada. For instance, this is used for food products, feed and seed. Of that domestic share, about 46% of our wheat goes to milling and 40% goes to animal feed. The remaining 14% goes to seed and residual. The remaining 43% of Ontario wheat is exported out of the province to places like Quebec and United States as well as markets in Mexico, Colombia, Jamaica, Italy, the United Kingdom and Algeria. So, it is a mixed bag, but clearly when Ontario wheat leaves Canadian shores it's got to be cheap. That's the only way to compete on the open seas. The challenge for Ontario farmers, of course, is to keep moving forward despite the complexity and contradictions of growing wheat. It's a crop that feeds the world and yet hardly buys the groceries here at home. Every time I swing the combine around and see that golden wave ahead, I'm reminded this is still a noble pursuit -- even if the market sometimes treats it like an afterthought. But that's farming. We plant with hope, manage with grit, and market with a sharp pencil. As we roll through another Ontario wheat harvest, the reward is not just in the yield monitor -- it's in knowing we've once again managed four seasons of risk, from frozen November drills to high-summer dust. That's worth something. As always, daily market intelligence remains key, especially in a world that changes fast. There will be many grain marketing opportunities ahead, even for the crop we sometimes call poverty grass. ** The views expressed are those of the individual author and not necessarily those of DTN, its management or employees. Philip Shaw can be reached at philip@philipshaw.ca Follow him on social platform X @Agridome (c) Copyright 2025 DTN, LLC. All rights reserved. |
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