Stu Ellis: Wheat Challenges and Opportunities

by Stu Ellis

Where will wheat turn up next?

Even though cash corn at some central Illinois elevators is $8 and May soybean futures on the Board of Trade closed over $17 per bushel Tuesday (April 19), there is quite a bit of discussion about the potential profitability of wheat in the middle of the Cornbelt.

And other unexpected places as well!

The prime driver of interest in wheat of course is the conflict in the Ukraine.

Wheat’s importance to global food security cannot be overstated.

It is needed for bread.

Bread is on the plate of a majority meals eaten daily around the world. And a world without bread produced from wheat would starve millions, topple governments, and create pandemonium that may not be foreseen.

Russian and Ukrainian farmers produce 30% of the wheat traded around the world.

There are concerns about how much that supply will drop this year.

Ukraine may be kept from harvesting, and Russian exports are being banned by many countries. Those billions of bushels of wheat will evaporate from the supply going into flour mills.

Cannot the rest of the world make up the shortfall? No one is predicting that.

The US wheat belt in Kansas, Oklahoma, Nebraska, and in portions of neighboring states are the central focus of the US drought.

Yields have been diminished.

And that is the same for Canadian wheat.

Its central and western prairies are drought stricken as well.

China is the world's largest wheat producer but does not export any.

Argentina is expected to increase its wheat production and increase its exports, but that is for the crop soon to be planted.

Brazil will plant more wheat, but Brazil consumes more than it produces, and typically imports wheat.

With global wheat stocks dropping below sustainable levels, wheat prices have proportionately matched or exceeded corn and soybean prices.

That makes Central IL farmers try to remember what Dad and Grandad did when they double cropped wheat and soybeans.

Such interest has not been lost on the Illinois Wheat Association, whose executive director recently said his group was holding educational sessions on double cropping.

Wheat production in central Illinois is profitable, but only if there is a follow-up soybean crop after wheat is harvested, says University of Illinois farm management specialist Gary Schnitkey.

In a rare move away from his typical topics of corn and soybeans, Schnitkey calculated fertilizer costs when it comes to wheat production.

On a per acre basis, corn was $286, soybeans were $111, and double crop wheat and soybeans were $75.

However, his projections for the financial returns to the land and the operator were quite impressive for a wheat and soybean double crop based on 2023 crop prices and production costs.

For corn, that return was $243 per acre, but for double crop wheat and beans, it is $422 per acre.

David Brown, a long-time wheat producer in Macon County, frequently said an early summer wheat crop always represented good cash flow, at a slack time of the year for grain income. Will more corn and soybean farmers join him?