This board is heavily skewed towards Cornbelt economics.

On the plains we’re entering our 4th year of drought.. Yes recent rains are cause for optimism but area lakes.. down by half since this drought started.. tell the story.  It’ll take months of above normal rains to right the ship.

https://www.kake.com/home/low-water-levels-at-cheney-reservoir-devastating-to-obriens-marina/article_1753534f-b1cd-4bf6-8695-9644a2545219.html

Dryland Continuous Wheat production costs are generally north of $200 / acre yet returns have only been 67% of that.. 20 bushel wheat x $6.00. The current new crop bid is $4.80.  And hopefully this is the year we get back on trend.. and hopefully cover costs from actual production..  We’ll see.

 Last time I looked.. The funds are heavily short wheat.. hmm almost 200 k contracts or a Billion bushels.  Lovely.

Given current wheat economics.. producers should put a fence up and graze every acre.  It’s not a popular opinion but good wheat production comes from tillage.. my neighbor who passed a few years ago.. raised some of the best wheat.. plowing.. every acre.. every year.. his entire career.

You simply can not afford to do that today.  

In replacement machinery costs.. nor moisture losses.  Yes it’s “easy” to drag a wheat drill across soybean stubble which has occurred with $12 x 25 bu returns.. but if Tariffs drive that to $8.  And the moisture deficit cuts wheat yields by a third.. returns are negative.

KSUs dryland soybean crop budget yields are 40 bushels.. yet several fields have been a goose egg here the last couple years.

In fact KSU budgets are way out of whack for what has been occurring.. during this multi year drought. 

Coupled with the fact they are too low on todays equipment replacement costs.. in two decades planting costs have tripled.. from $8 to $24 an acre.. while Deeres internal numbers are $28 going to $35.

You can’t afford to till the ground.. but our supply of cheaper Chinese chemicals are being tariffed away also.  Does the market realize this?  

Next years Real Wheat budget breakevens on normal yields are over $7 a bushel. 

just pointing out the elephant in the room… later.

 

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