On the heels of planting his 2024 wheat crop, western Kansas farmer Ron Suppes lamented a rather bleak future, with equal shares of blame for the weather and politics.
Based in Lane County, with an operation that reaches into Scott and Finney counties, Suppes guessed in early October there was just enough moisture for the crop to emerge and achieve adequate top growth before winter dormancy.
But with a relatively dry subsoil, regular doses of rain will be necessary on the long journey to the early summer 2024 harvest.
“Farmers are hustling right now. They know the moisture is leaving,” he said. “They need to get with it if they’re going to have a stand.”
Many perils await Suppes, a Kansas Wheat commissioner who is on a number of agriculture-related state and federal committees.
Worries include the high cost of inputs—fertilizer, herbicide, insecticide, machinery, interest on operating capital, and inadequate crop insurance coverage—commodity markets, and other global issues.
Price a big unknown
Looking forward, Suppes fears chances are grim for a competitive price when combines begin to whir next summer.
Daniel O’Brien, a Kansas State University Research and Extension agricultural economist, based in Colby, projected the full economic cost breakeven price for a decent wheat harvest next year—with yields of 45 bushels to the acre—at $9.01 a bushel, factoring in the full cost of cash rent and machinery costs. This compares to direct or cash costs—less cash rent and machinery costs—of production at $5.70 per bushel.
The local cash price in Dighton was hovering just below $6 a bushel early this month, Suppes said.
Most farmers make their cropping decisions based on these “direct costs” O’Brien said, which considers fertilizer, seed, fuel, labor and other cash costs, but not cash rent and machinery investments.
In this case, he said direct costs of production for wheat in wheat-summer crop-fallow rotations are estimated to be $5.70 per bushel at the 45-bushel yield level in southwest Kansas.
In comparison to currently available new crop July 2024 wheat bids of $6.29 a bushel offered by local grain elevators on Oct. 4, there would be a profit of 59 cents a bushel over the $5.70 direct cost breakeven, O’Brien said, that would be available to go toward paying cash rents and replacing farm equipment.
“From a long term full economic cost perspective, you would be operating at a loss,” O’Brien said. “That said, in the drought- and weather-challenged areas of western Kansas, our farmers don’t consistently meet the financial goal of covering full economic costs for the crops we grow here.” In this case, to cover total expenses at the $6.29 selling price, farms would need yields of 64-bushel per acre to cover expenses—rather than the 45 bushel per acre average currently estimated in the K-State crop budget.
Other crops in similar straits
Same goes for all major crops—wheat, sorghum, corn, sunflowers, and soybeans.
“All of them would be challenged to cover full economic costs at average yields and current selling prices,” O’Brien said. “That’s what is driving us to fewer, but larger, farms in Kansas and elsewhere. It’s a major problem we have with agriculture in western Kansas, that we have a difficult time covering our true full economic costs with the crops we produce.”
How those facts affect farmers “depends on what value you put on your own income, how leveraged you are in land and equipment, and interest rates, which are not very friendly right now,” Suppes said. “We’ve got a lot of different things going right now, including a global influence. When you’ve got Russia and Ukraine exporting 30% of the wheat in the world, and they don’t care much about the profits they receive, that makes our stuff pretty cheap.”
Export picture
Naomi Blohm sides with Suppes’s concerns. The senior market advisor with Total Farm Marketing expects typical changes to occur this month.
“I can tell you that our exports are only average, as Russia is undercutting wheat prices and is gaining some global business because of that,” Blohm said.
“However, now that wheat prices are so low, I would think that we will see an uptick in U.S. wheat exports, soon.”
Thus, some of the gloom could ease temporarily.
“Seasonally, both Chicago and Kansas City wheat futures prices have a tendency to increase for a few weeks in early October—then fizzle out,” Blohm said.
The war between Russia and Ukraine has played a role in price spikes, Suppes said.
“Every time Russia makes a move into Ukraine, it improves the prices, but when the wheat price is high, inputs follow, and they stay up while the wheat price is falling,” he said. “What I’m concerned about right now is the way Russia is manipulating the price. They flood the market. Part of it could be Ukraine wheat, too.”
Meanwhile, Suppes said, “farmers hear in the news about the aid we’re giving to Ukraine, especially farmers and even shop keepers, and their fertilizer is getting subsidized. That’s a hard pill for us to swallow. We’re not in the best shape either.”
Tim Unruh can be reached at [email protected].
White wheat revival could benefit High Plains growers
By Tim Unruh
Ron Suppes favors ramping up production of hard white winter wheat in Kansas, “so we’re not competing so much with Russia.”
Categorized as “the newest and the smallest class of wheat in the United States,” according to uswheat.org, advantages exist in milling and baking.
“There is little difference in kernels, with the exception that hard white’s outer covering is thinner, making it more conducive for whole grain,” Suppes said. “The bitterness is less and you’re able to mill the whole kernel. We’re trying to convince the industry.”
Hard white winter wheat is primarily grown in the central Plains, Montana, Idaho and California—with a heavy smattering in western Kansas, eastern Colorado and southwest Nebraska.
Domestic production ranged from 0.7 million metric tons in 2021 to 0.5 mmt in 2022, versus 14.1 mmt of hard red winter wheat.
“Hard white was starting out to be a big deal 30 years ago, but we got our cart in front of the horse, produced a bunch of white wheat and didn’t have much of a market for it,” Suppes said.
A healthy market for hard white exists today in Nigeria, Taiwan and Mexico, he said, but now there is not enough production in the United States to meet those countries’ needs.
“We not only have domestic customers for hard white winter wheat, but for years, international buyers have been clamoring for our product. Rather than to continue to lose white wheat acres we need to grasp the situation. This would be possible and is within reach only if all the U.S. wheat industry gets on board,” Suppes said “There is not enough critical mass. Hard white wheat needs its own market on the board of trade. It should be treated as its own commodity.”
Separating the traditional hard red winter wheat from the hard white winter wheat at the grain elevators proved problematic, he said. Today, the gradual increase in identity-preserved hard white winter wheat is primarily in farmer-owned storage.
“Elevators are docking (price) for hard white,” Suppes said. “We’re trying to increase the percentage of hard white to have more flexibility. We’ve kind of given that market to Australia, and the other competitor is Canada.
“If we could turn about a third of Kansas into hard white wheat and a third of Oklahoma and Texas, we could go into a higher end market—Asia. We would get into more markets.”
