Texas Wheat Prices Trending Downward

Bill Thompson, AgriLife Extension economist, San Angelo, said prices for Texas wheat have been in a multi-year downward trend. Texas wheat acres decreased from 6.1 million acres planted in 2015 to 5 million in 2016 and again in 2017 with 4.5 million acres planted, Thompson said.

Cotton is king in West Texas, and wheat is a secondary fall crop that producers typically plant in a rotation for grain or forage production and winter field cover for acres dedicated to cotton, he said. Before prices began falling, wheat was an additional post-cotton harvest income source.

However, covering variable costs for fuel, seed, fertilizer and other inputs has been tricky for producers the last few years as wheat prices fell, Thompson said. At harvest this past year, wheat prices were around $3-$3.10 per bushel. Total expenses per acre could be around $6.25 for dryland wheat that produces about 25 bushels per acre, which is typical for the area.

Producers could cut those per-acre costs by implementing improved wheat production techniques but would still lose money, he said.

“At 40 bushels an acre you could get the total cost down to about $3.90 per acre, which you’re still not making money. You’re just not losing as much,” he said.

The U.S. only produces about 8 percent of the global wheat supply, Thompson said, and the 10 percent drop in Texas wheat acres won’t have a significant impact on international markets.

Thompson said timing and weather also played some role in the amount of acres planted. Rains delayed cotton harvests, and producers’ top priority was getting cotton out of fields.

Subsequent rains prevented producers from getting into fields to plant wheat, he said, but prices and the futures market played a role as well.

“Low prices did have some impact on supply and demand,” he said. “Some producers went with alternative crops like canola. In West Texas at least, you’ll likely see those acres going back to cotton this spring.”

Thompson said prices could jump if fewer acres planted translates into low supplies amid high demand, but he doesn’t believe that with global surplus levels, any price spike would be significant enough to make producers take notice.

AgriLife Extension district summaries can be found here.

Source: Texas AgriLife Extension

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