This month’s update form Dr. Todd Davis includes projected profitability and break-even analysis, impact for storage, risk management opportunities, balance sheets, and more.
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For wheat, the supply estimates have been mostly finalized by October with adjustments in January’s final projections for the crop-year. USDA projects the 2018 wheat yield at 47.6 bushels/acre, a 1.3-bushel increase over 2017, on 39.6 million harvested acres. USDA projects total wheat production at 1.88 billion bushels. The larger wheat crop is off-set by a smaller carry-in and reduced imports with supply projected to increase by 45 million bushels from 2017-18 (Table 1).
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Compared to last year there is a modest increase in wheat prices, and a significant decrease in soybean prices. These changes will make planting wheat more attractive relative to last year. The following analysis attempts to quantify the extent of the relative change in profitability for crops harvested in 2019.
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The USDA reports reveal the potential for a bullish wheat market based on declining U.S. stocks as well as reduced stocks and production in major exporting countries.
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The November WASDE made minor changes to the 2017-18 wheat supply and demand projections, which is typical as there is little new production or demand information until the “final” estimates in January.
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Kentucky grain farmers are harvesting corn and are getting to the point where they will decide if and how much wheat they will plant this fall. The main changes this year are a modest increase in wheat prices, a small increase in soybean prices, and a slight decrease in nitrogen prices. These changes will make planting wheat more attractive relative to last year. The following analysis attempts to quantify the extent of the relative change in profitability for 2017. The analysis includes estimated returns comparing double-cropped wheat/soybeans with full-season soybeans for the 2018 crop, and the likely implications for Kentucky grain farmers.
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U.S. farmers produced lower volumes of a very good SRW crop for marketing year 2017/18. This SRW crop has uniformly low dockage, good test weight, somewhat lower protein, very good kernel size and weight, low DON values and no notable pockets of low falling number. Flour extraction rate is somewhat lower than last year. That is a good summary of results from USW’s 2017 SRW Quality Survey Report, now posted online at www.uswheat.org/cropQuality.
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