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Grain Markets Favoring Wheat And Double-Crop Soybeans
Wheat prices have significantly increased over the past year, which makes
it attractive for Kentucky grain farmers to plant wheat this fall.
Photo by Matt Barton, UK agricultural communications.
LEXINGTON, KY.
As Kentucky producers begin to decide their planting intentions for the next growing season, current grain markets favor a wheat, double-crop soybean rotation over full-season soybeans.
“Right now, expected market prices look incredibly attractive for Kentucky producers to plant wheat and double-crop soybeans in most scenarios,” said Greg Halich, agricultural economist with the University of Kentucky College of Agriculture, Food and Environment.
Compared to 2019, wheat prices have increased significantly, and soybean prices have had a slight increase. Higher wheat prices are due to a higher global demand, as countries stock up on supplies due to the Covid-19 pandemic, and lower worldwide production in 2020, because the crop was impacted by adverse weather conditions across the globe.
Projected wheat prices for the 2021 harvest are around $5.80 per bushel, which is an increase of nearly $1 per bushel from 2019, and the projected soybean prices for the 2021 harvest are around $9.60 per bushel.
Halich analyzed potential returns for two large grain production areas in Kentucky. The southwestern part of the state does a lot of double-cropping already, and the Ohio Valley tends to grow more corn and full-season soybeans. He also considered additional operating costs related to growing double-crop soybeans in his analysis and average cash rents for average and best ground in these two areas.
“The increase in net profit would vary based on yields and operating costs, but in the southwestern part of the state, producers could earn as much as $144 more per acre from growing wheat and double-crop soybeans on their best land. Those in the Ohio Valley could get as much as $60 more per acre on their best ground,” Halich said.
On average land in southwest Kentucky, producers expect average yields of 72 bushels per acre for wheat, 42 bushels per acre for double-crop soybeans and 50 bushels per acre of full season soybeans. In this scenario, Halich anticipates that wheat producers could have net profits of $64 per acre by planting wheat and double-crop soybeans compared to $11 for full-season soybeans. With higher average yields expected on prime agriculture ground, those returns could increase to $198 per acre for wheat and double-crop soybeans compared to $54 per acre for full-season soybeans.
On average land in the Ohio Valley, Halich estimates that producers could see a $14 per acre increase if they were to grow wheat and double-crop soybeans. If they plant wheat and double-crop soybeans on their best ground and get average yields of 75 bushels per acre of wheat and 51 bushels per acre of double-crop soybeans, they could see as much as a $60 per acre net profit over full-season soybeans with an average yield of 60 bushels per acre.
“The double-crop soybean yields would have to drop significantly before full-season soybeans became more profitable in three of the four situations,” Halich said. ∆
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