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Where does wheat fit in to the battle for acres?

Agriculture.com Staff 09/22/2008 @ 2:39pm

The combines are just firing up in the nation's midsection, but farmers are already weighing the pros and cons of all their planting options for 2009.

While the battle between corn and soybeans is already well documented, how does wheat fit into the mix? Wheat prices are well off the highs they saw for the 2008 crop. While the current pricing will challenge growers' budgets to make wheat work in '09, there are ways to generate cash flow in the crop, but it will take a keen eye and quick action on input costs and marketing

Looking at the big picture from now through the next marketing year, economists expect wheat prices, at least in the short term, to be supported by tight world supplies. Though this will likely mean $6.00-per-bushel prices or higher through the marketing year, that's not to say the market won't see volatility between now and the 2009 harvest, according to South Dakota State University (SDSU) ag economists Alan May, Jack Davis and Matthew Diersen.

What's more, they say variables like input costs -- which could be 30% or more higher next year than in '08 -- make it important to nail down profits however possible.

"It will be important for wheat producers in the U.S. to be keenly aware of input costs and the relationship those costs have in developing a sound marketing plan. This will be critical in managing the risk of a volatile but potentially bearish market in 2009," the economists wrote recently.

Fertilizer will likely be the king of higher inputs in the coming year. Of the average $92-per-acre increase in input costs (a projected $309 per acre in '09 compared to $217 per acre in 2008 in South Dakota), fertilizer costs account for 70% of the jump and represent 40% of total production costs.

"To help manage this cost, it is important to soil test, set realistic yield goals and follow recommendations," according to May, Davis and Diersen.

The combines are just firing up in the nation's midsection, but farmers are already weighing the pros and cons of all their planting options for 2009.

Input costs will go a long way to determining how much wheat is harvested next year, but a lot of factors beyond the field's edge will dictate how much revenue is generated once the combines are shut off. Worldwide wheat demand and the value of the U.S. Dollar will loom large for '09 wheat price levels, according to May, Davis and Diersen.

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