If the wheat production forecast in the September USDA-NASS Crop Production report holds through the US harvest which is nearly complete the wheat harvest this year will be the lowest in 44 years. That is -15.5% when comparing to the 2016 US harvest.
It’s not a story of acres which remain unchanged at 38.1M acres, the yield is down to an average 38.3 bushels per acre which is 9 bushels per acre lower than 2016. Using the closing data for 9/13 for spring wheat and some simple math of $6.40/bushel that’s $57.60/acre less this year than last.
So what’s that mean for profitability?
Variable input costs - what does $57.60 mean?
~100% of your chemical cost could have been covered
50% of your land rent could have been covered
75% of your fertilizer bill could have been covered
I put together a quick Google Sheets spreadsheet to illustrate the profitability and breakeven point using the following data:
Price Per Bushel: $6.40
Fixed Per Acre Cost (Rent, Machinery etc.): $130
Variable Per Acre Cost (Seed, Fertilizer, Chemical): $125
Based on these inputs, profitability sits at the 41 bushel per acre point.
If you’d like to use this simple calculator to do some “what if” scenarios using your own price per bushel, fixed and variable costs you can access it here. We had fun inputting price per bushel of currently contracted wheat and taking a look at increased fixed cost per acre (new combine) to check out profitability.
If you have any questions using the calculator, comment below or e-mail me at email@example.com.