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Does $10 Wheat Mean More Acres?

By Vance Ehmke

After several years of selling wheat for $5 a bushel, we finally broke out of the rut when wheat prices exploded and more than doubled. But even with $10 wheat, if you’re betting on a big jump in the Kansas wheat acreage, it’s a bet you’re probably going to lose.

If anything, I hope the Kansas wheat acreage can hold onto the small gains it has made in the past year or so. But what’s going on nationally with wheat is a concern. In USDA’s prospective planting estimates for 2022, the “all wheat” acreage is pegged at 47.4 million acres—and that’ll be the fifth lowest wheat acreage since records were started in 1919.

Back several years ago, the Kansas wheat acreage had slipped to the smallest acreage planted in over 100 and 110 years. This probably happened because we farmers could make more money doing other things—like planting grain sorghum and corn. And if you look at the current K-State crop production budgets for 2022, that’s still the case—even with much higher wheat prices.

The problem is that corn and milo prices have also gone up. We’re not just short of wheat. We’re short of everything. And the markets reflect it.

Looking at the K-State budgets before the markets really took off, dryland wheat in southwest Kansas with a yield of 45 bushels per acre netted $21/acre. In a wheat-sorghum fallow rotation, wheat netted $14. Dryland milo with a yield of 81 bushels per acre netted $101/acre while dryland southwest Kansas corn with a yield of 82 netted $74. In the profitability race, wheat finishes last.

So, in this scenario, why would you plant more wheat? For that matter, why would you plant corn over milo? That’s another thing that is quite perplexing—especially for those of us in drought-prone  southwest Kansas. According to USDA’s 2022 prospective planting estimates, the sorghum acreage is projected to drop 15%. What am I missing?

Then after the markets really took off and wheat went from $7.67 to $10/bushel, wheat profitability jumped from $21 to $139/acre. Wow! But what happened to the profitability or milo and corn? Assuming a constant production cost and with a more current milo price of $7.44, milo profitability jumped from $101 to $263/acre. Corn net jumped from $74/acre to $262/acre.

So even with $10 wheat, we wind up in the same place: It is very difficult to make a case for growing more wheat.

The trap, however, is looking at these crops individually rather than as in a rotation. Based on work at K-State’s Tribune Experiment Station, growing continuous milo doesn’t work very well. When you go from a no-till wheat/sorghum/fallow rotation to a wheat/sorghum/sorghum rotation, yields of the second sorghum crop drop over 40% while incidence of crop failure goes through the roof.

Research at KSU’s Colby Experiment Station says the same thing. On an annualized profit basis, the most profitable rotation in western Kansas is the wheat/sorghum/fallow rotation. Actually, in this study, the old fashioned wheat/fallow/wheat rotation faired quite well and finished just behind the three-year rotation. All annual rotations were under water.

Critics of the Colby study say, “Well, there were some dry years in the study which reduced yield of the summer row crops.” And to that I say, “Have you taken a look at the forecast for April, May and June—not only drier than normal, but much hotter than normal?  I don’t think Mother Nature is going to let us forget what dry weather looks like.

It would help, however, if we could beef up the profitability of growing wheat. And we are moving in that direction. The new wheat gluten plants for Kansas will definitely increase demand for the crop. Plus, K-State wheat breeder Allan Fritz is working to increase the value of the crop by developing winter durum wheat varieties that may produce lower yields but much higher prices.

Another thing I’m really excited about are KSU efforts to develop high protein varieties that will allow us growers to capture high protein premiums. And I’m not talking about just high protein contents—I’m talking about off-the-charts protein contents. Allen tells me he’s working with varieties that produce protein values of 20%–and even higher!

So don’t count wheat out. We may never grow 10 million acres of wheat in Kansas again. But neither is the crop ever going to go away!

marit34Does $10 Wheat Mean More Acres?
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