Dryland wheat grain and forage conditions in our area are mostly poor and very poor. The Wheat and Small Grain Decision Aids will help you analyze which is the best alternative for your wheat fields according to your expected yields, production costs, equipment, and other variables.
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Cattle producers welcome Contract Library pilot program – Morning Ag Clips
First half 2022 price prospects – Corn & Soybean Digest
Sorghum an option on more irrigated acres – Farm Progress
Dryland Wheat Alternatives.
Most dryland wheat crop conditions in our area were rated poor and very poor. There are still chances for a decent crop in many places, although this probability gets smaller over time. It is necessary to have and analyze available alternatives for our wheat according to our expected yield, production costs, rotation, available harvest equipment, insurance, etc.
The “Wheat and Small Grain Decision Aids” Excel spreadsheet is a great tool to help you with those decisions’ economic and financial analyses. You can download this decision from our District 3 website (https://vernon.tamu.edu/extension-projects/d3-agricultural-economics/).
We will use District’s 3 Budgets and assume a lower expected yield as an example to analyze and compare three different alternatives: Wheat Grain Harvest, Wheat Grazed Out, and Wheat Bale Hay. There will probably be differences in costs between our budgets and your costs. First, inputs costs might differ considering the high volatility of their prices these last months. Second, your costs will vary according to each field’s technology and agronomic practices. We assumed that we custom hire harvesting and baling equipment in all these cases.
Wheat Grain Harvest vs. Wheat Grazed Out
This year of high costs and low forage production grazing our wheat is not the best alternative (Table 1). It might be feasible in those fields with a very low estimated yield and high harvesting or baling costs. The probability of being a profitable decision is low, although it might be the best option to reduce losses.
Table 1. Wheat Grain vs. Wheat Grazed Out Profitability
Lower expected yield and lower forage production will lower weight gain for stockers on those pastures. And especially considering this year’s brief grazing period. Not many wheat fields have been grazed this year.
In most cases, this is not the most profitable option, and depending on the cost incurred, the business will require high grazing prices ($/Lb of gain) to become profitable. We assumed 45 days grazing, 0.75 acres/head, and an average daily gain of 2.35 Lbs/day (Table 2). These production rates are trying to reflect the low forage production of most fields. You must honestly estimate your production assumption that better reflects your field conditions and expectations.
Table 2. Assumptions
This Decision Aid can compare these alternatives from the economic (Table 1) and financial point of view (Table 3). In both cases, even comparing lower wheat grain prices and higher grazing prices, Wheat Grain Harvest seems to be a better option.
Table 3. Wheat Grain vs. Wheat Grazed Out Cash Comparison
Wheat Harvest Grain vs. Wheat Bale Hay
We should always consider analyzing these two options, given that the best alternative mostly depends on the relative prices of wheat grain and wheat hay when harvesting is an option. Especially this year, where high hay prices are very competitive. Moreover, finishing our wheat crop earlier might allow us to plant cotton if the crop rotation and soil moisture allow it.
We consider that the grain yield corresponds to 40% of the total biomass production to calculate the potential hay production. Therefore, a 25 bushels/acre wheat yield would produce total biomass of 1.7 tons per ha. We assume we bale and harvest 76% of the total potential biomass, resulting in a 1.3 ton/acre yield (Table 2) (Wheat Hay vs. Grain: A comparison of economic opportunity, Reagan Noland, Bill Thompson, and Clark Neely). Estimating your grain and hay yield potential is key to comparing these two options.
Grain production remains the best alternative (Table 4). Hay production will be a better option, with hay prices above $205/ton. We assume that machinery is hired for both harvesting and baling. Keep in mind that these results may differ in farms that have their equipment for harvesting grain or baling hay.
Table 4. Wheat Grain Harvest vs. Wheat Bale Hay Profitability
The Decision Aid will use your data and costs to calculate hay breakeven prices with similar wheat grain profit margins (Graph 1). We might consider baling our wheat if we can sell our hay production at prices above the hay breakeven price for a given wheat price and expected grain yield. For example, for an estimated yield of 20 bu/acre and a grain price of $11/bu, we would only want to bale our wheat if the net price per ton of hay is greater than $218. We are considering a hay production equivalent to 1.04 tons per acre for a 20 bu/acre wheat.
Graph 1. Breakeven Hay Prices.
Wheat Hay and Dryland Cotton
In addition, we might consider baling our wheat and planting cotton. Finishing the wheat crop earlier might allow us to grow cotton. This decision will depend on many variables other than the profitability of our cotton crop, crop rotation, soil moisture, and crop insurance. We might increase our risk exposure if we cannot have an adequate insurance policy and risk management tools.
High cotton prices and higher margins (Table 5) might be a tempting option that will compensate a slight loss for baling our wheat. Although, high input costs might erode those margins and increase our exposure with this alternative. We should also consider this year’s climate and production risk. This decision will depend on the estimated yield of wheat, the potential yield of cotton in that field, hay prices, and available insurance.
Table 5. Cotton Profit Margins.
The Wheat and Small Grain Decision Aids is an economic and financial tool to help every farmer make sound economic and financial decisions. Using your data, yield expectations, and costs to better analyze these alternatives is essential. These examples reflect today’s wheat conditions and expectations. We hope to see higher soil moisture and better crop conditions will affect these decisions shortly.