The grain markets are reaching for the sky
First of all, if you have not forward sold some 2021 crop or 2022 crop, please pick up the phone and do so now. These price opportunities are incredible, and we have to reward the rallies. Soybeans and corn seem to be leading the way, however the wheat values are very strong as well. With the chance to sell $17.00 soybeans for harvest ’21 delivery, the immediate reaction is “How do I grow the biggest yield?”. But DO NOT let that come at the expense of your 2022 wheat production.
With 2021 crusher soybean price opportunities exceeding an astounding $17.00/bu harvest delivered to the elevator (as of May 7) the natural instinct is to want to grow the LARGEST crop possible. ($20.00 for some IP enthusiasts). I certainly understand. The seed companies and soybean experts alike would immediately utter the valid suggestion of “Go Long!!”. The long season soys have the opportunity to yield more. But let’s not forget that for every action, there is a reaction, and we can not allow the soybean maturity choice to delay our wheat planting this fall.
For this article I did the math for two years of crop revenue and completed cost of production charts for 2021 soybeans and 2022 wheat. I assumed that the grower could lock in 100% of grain prices today at the posted elevator bids. $17.00/bu for 2021 soys, and $8.00/bu for 2022 wheat. (Again, AMAZING PRICES!!). I compared GROWER A who is choosing a conservative soy maturity and planting early wheat, to GROWER B who is choosing a long bomb soy maturity and sneaking wheat in three weeks later. I tallied the total revenue per acre over the two year period.
Grows a respectable 55bu/ac soybean crop and always get his wheat in near optimum timing. With the planting date at optimum timing and solid management, his five-year average wheat yield is 110bu/ac. Together, this leads him to retain a profit of $703/ac in two-year span.
Is chasing the big bucks. He is committed to planting wheat, but he is determined to plant long day soys to turn every possible ray of 2021 sunshine into cash. This will mean his wheat gets planted three weeks later than optimum. Year in and year out, we have witnessed that the penalty of three weeks later planting is 20bu/ac. Grower B can only sell 90bu/ac of 2022 wheat. The question becomes, “How large of a soybean crop do I need to grow in 2021 to replace the earnings I could lose in my 2022 wheat if I plant late?”…
By my math, GROWER B would need to obtain a 64.5 bu/ac soy yield in 2021 to net the same profits as GROWER A. An additional 9.5bu/ac (117%) Is it possible? Perhaps. However, it will most likely come at the added expense of drying costs and most likely include a soil compaction penalty due to harvesting conditions being less than perfect. (Note: cost of production will vary by operation, but I would challenge you to work out your own numbers. I would love to chat if you calculate something wildly different.)
Take home message is to not let the pricing situation distract you from making a good solid agronomic maturity decision. Be like GROWER A. Grow a satisfying crop of soybeans this year, and follow it up with a wonderful crop of wheat in 2022. (Please be sure to forward sell some of both!)