Economic Tidbits

Amber Waves of Grain

The University of Nebraska Wheat Variety tour this month means wheat harvest is right around the corner. Winter wheat, Nebraska’s third-largest crop, is planted in the fall and harvested the following summer. Wheat production in the state is centered in the Panhandle and southwest Nebraska. Cheyenne, Box Butte, Perkins, Red Willow, Kimball, Furnas, and Chase were the largest wheat-producing counties in 2022, accounting for nearly 50% of production (Figure 1). Production in 2022 was down 29% from 2021, largely due to drought. It rebounded last year totaling 37 million bushels, up 27%, with an average yield of 42 bushels per acre. USDA projects this year’s production will be largely unchanged, although the average yield is projected to increase to 47 bushels.

FIGURE 1. COUNTY SHARE OF WHEAT PRODUCTION, 2022

Source: USDA National Agricultural Statistics Service

U.S. wheat acres dropped to a 100-year low in 2019. Acres in Nebraska followed suit hitting a low in 2020 of 900,000 planted acres (Figure 2). International competition, lower prices, geopolitics, and better profitability growing other crops have reduced wheat acres. However, since 2020, acres in Nebraska have grown, in part due to drought in other parts of the world and uncertainties created by the Russian-Ukrainian war. Last fall, 1 million acres were planted, down from 2023, but up 10 percent from 2020.

FIGURE 2. PLANTED ACRES TO WHEAT IN NEBRASKA

Source: USDA National Agricultural Statistics Service

Cash bids for wheat in southwest Nebraska are currently around $5.80 per bushel compared to $7.40 last year at this time. The USDA projects the season-average farm price for the 2024/2025 marketing year will be $6.00 per bushel, down $1.10 from last year and off nearly $3.00 from two years ago. Production costs though, while moderating, remain high. Last fall the University of Nebraska Center for Agriculture Profitability estimated the average per bushel economic cost of production for dryland wheat at $6.00 per bushel, down from $6.50 in 2023. However, the costs were based on larger yields than that projected by the USDA. Unless this year’s yields exceed the projected state average by a wide margin, it appears positive returns for wheat producers will be hard to come by.

You may also like