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The current downward trend in wheat prices continues to impact wheat production in our area.
\nThe prices are currently at or below the economic breakeven levels calculated for various regions
\nwithin our districts. Additionally, higher costs and an expected dry season due to another La
\nNi\u00f1a year are increasing the risk for ranchers this year.<\/p>\n
Although the world wheat reserves have been diminishing these last years, U.S. stocks have\u00a0increased since 2022, contributing to lower prices.<\/p>\n
Analyzing the Texas Cash Grain Prices since August 2020, we have observed cash prices as low\u00a0as in late 2020 but with higher production costs (Graph 1). Market volatility emerged in July and\u00a0August 2023 due to uncertainties surrounding Black Sea exports, leading to a steady price\u00a0decline.<\/p>\n
Graph 1. Texas Cash Grain Prices. August 2020 \u2013 August 2024.<\/strong><\/p>\n Estimated Wheat Budgets<\/strong><\/p>\n Farmers decide whether to graze their wheat, harvest only, or pursue mixed strategies in the\u00a0Southern Rolling Plains, where wheat production includes grain and forage grazing. Today, we\u00a0will analyze various budgets, including Wheat Dryland \u2013 No-Till, Wheat Dual Stockers 700\u00a0Lbs., Wheat Dual Stockers 800 Lbs., and Wheat Grazed Out (Table 1). While production costs\u00a0are slightly lower than last year, mainly due to lower fertilizer prices, net margins have also\u00a0decreased. The breakeven prices are lower than this region’s 2025 wheat market prices.<\/p>\n Table 1. Wheat Budgets Summary<\/strong><\/p>\n Estimated Results<\/strong><\/p>\n A preliminary assessment of these budgets indicates a negative outcome for non-till wheat grain-only production when accounting for all variable and non-variable costs, such as depreciation\u00a0and interest in equipment. Based on a yield of 45 bu\/acre and a wheat price of $4.8\/bu, the\u00a0breakeven price for covering total costs is $6.4\/acre. The breakeven yield at these anticipated\u00a0wheat prices is 55 bu\/acre to cover all costs (Table 2). For those owning all machinery,\u00a0considering only financial costs, this indifference yield drops to 46 bu\/acre, though not\u00a0accounting for future amortization costs.<\/p>\n In the dual-purpose wheat production scenario (Wheat Dual Stocker ~700 Lb), pulling cattle\u00a0before March 1st and harvesting the entire planted area, a five bu\/acre yield drag was considered\u00a0due to grazing effects. With an estimated grazing production of 80 pounds per acre, the\u00a0breakeven price is $5.9\/bu. This result reflects a slightly improved outcome due to grazing\u00a0income at $0.85 per pound of gain.<\/p>\n Table 2: Price and Yield Sensitivity Analysis (Part I)<\/strong><\/p>\n The Wheat Dual Stocker ~800 Lb scenario, representing a system keeping stockers from early\u00a0grazing through May 1st, requires approximately 33% of the planted area for late grazing, which\u00a0will not be harvested. Despite a decrease in breakeven price to $5.4\/bu, net results closely mirror\u00a0the grain-only wheat scenario due to the additional grazing income hardly offsetting the lower\u00a0harvested area.<\/p>\n In the Wheat Grazed Scenario, additional cattle were assumed during the second grazing phase\u00a0to optimize forage use and increase the total pounds gained per acre. With an estimated total\u00a0production of 271 pounds per acre, the enterprise’s net income amounted to $10\/acre. The\u00a0grazing breakeven price to cover full costs was $0.82\/lb. Like last year, this scenario has the\u00a0potential to be the most profitable alternative in the region.<\/p>\n![\"\"](\"https:\/\/agrilife.org\/agecon\/files\/2024\/09\/Screen-Shot-2024-09-26-at-8.11.45-AM.png\")
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