Is US Wheat Profitable?

Yes it is, but only just is the answer according to economists Alan May, Jack Davis, and Matthew Diersen of South Dakota State University.

Total US production costs are expected to rise from $217 in 2008 to $309 next year, with 70% of the increase due to fertilizer price, they say. Consequently, they are recommending soil tests to determine fertilizer needs more accurately. Based on a 50 bu. yield and a $7.50 market price, gross revenue would be $375 per acre. With production costs estimated at $309, they project a return to labour and management of $65.85 per acre.

If prices were to fall to $6/bushel then wheat would fail to break even. The South Dakota economists say despite larger wheat supplies, those supplies will be tight enough to support prices above $6 for the balance of this year.

In the US winter wheat planting conditions are currently said to be very good and some analysts expect acres to be higher. Howver they say that they'll likely see more winter wheat grazing as well, so harvested acres are a little harder to determine. Plantings are slightly behind normal because of the hurricane rains throughout the southern and central plains. Even the very dry western plains have a good moisture base, the first time in many years.