A year ago, July ’13 wheat futures traded at $8.67. Today, July ’14 wheat trades at $7.04. The decline in wheat prices over the past year equates to about $98 per acre on an average 60 bushel yield.
One positive occurrence that may offset some of the negative price impact on gross revenues is lower fertilizer costs. In the last 12 months retail urea (46%N) prices are down 25%. Potash and DAP retail prices are also down 18 to 20% over the same time period. Fertilizer generally accounts for 40 to 45% of total variable costs in wheat production. The significant changes to both wheat and fertilizer prices over the past year warrant a fresh look at wheat costs and returns.
The University of Arkansas provides MS Excel crop budgets that allow growers to customize their estimated production costs as well as projected earnings and profit margins. As grain futures prices change and input costs such as fertilizer fluctuate, growers will find these spreadsheet tools convenient and easy to update.
Links to all the major row crop budgeting spreadsheets can be found at the web address below: