If you can’t make a profit a $7 per bushel, consider planting fewer wheat acres
September is a really important time to take stock of the wheat market. As harvest wraps up and the industry gets a better understanding of both crop yields and crop quality, prices shift into a trading range which reflects the supply and demand situation for the recently harvested crop, but most importantly for wheat growers it’s also a critical time to sort out the strategy for the crop that lies ahead.
One of the more interesting opportunities for farmers during the late summer of 2026 has been how the market’s anxiety over wheat has produced some really attractive prices to lock in 2027 and 2028’s production.
There are 3 main factors fueling the strength in wheat prices. The first is the concern over the impact that the forecasted super el Nino might have on southern hemisphere wheat production (particularly fear over much lower yields in Australia).
The second is the escalation in the military conflict between Russia and Ukraine, and in particular how the conflict impacts grain shipping out of the Black Sea region to export markets around the world.
Thirdly, the ongoing blockade of shipping into and out of the Persian Gulf, and America’s war with Iran, and how in times of uncertainty, money flows to food and fuel. Oil and other commodities have surged each time the conflict intensifies. All of our crop’s values have risen over the summer due to these factors but wheat has perhaps enjoyed the biggest upside.
As we move closer to planting another winter wheat crop, it is important to at least contemplate opportunities to lock in a profit on a measured portion of the coming year’s production. With bids for next year’s soft red trading in the $8.40s ($310/tonne) delivered to country elevators off the combine next summer, and higher value shipped to end users or stored for delivery in later periods, there has been a lot of interest in marketing 2027 crop wheat.
There is some hesitancy amongst some farmers to book too much 2027 crop when we don’t yet know how much inflation and geo-political uncertainty will impact input costs. But it’s important to recognize that part of the reason that 2027 wheat futures are $0.50 per bushel higher than they are for 2026 crop wheat is because the market realizes that growers are concerned about next year, and that if prices don’t show a return for new crop wheat, the acres might never get planted. If the marketplace believed that farmers were going to plant winter wheat anyway, there would be no reason to show higher prices for next year’s crop.
The real crop budgeting work is specific, calculated farm-by-farm, since each operation has its own yield expectations and its own production costs. But the real decision that needs to be made is that if you can’t pencil out a profit growing wheat when Chicago wheat futures are over $7 per bushel, it might be time to cut back on winter wheat planting. While the commodities markets are certain to fluctuate, as the futures carry erodes into the cash market, achieving a higher price for wheat might be an uphill battle.
It is impossible to predict what geo-political adventures might grab the world’s headlines between now and next summer’s wheat harvest but it is very likely that the world will come to terms with the forces that are pushing prices today. When Russia invaded Ukraine in February of 2022, wheat prices took off like a shot for a few weeks, and then drifted lower as the uncertainty of two of the world’s biggest wheat-exporting nations being at war eased into the realization that a certain amount of commercial trade could still carry on in the midst of the conflict.
While an escalation in those hostilities, particularly in terms of marine traffic safety, have helped to fuel this summer’s wheat rally, experience has taught us that the fund money’s interest in grain futures ebbs and flows as tensions ease. It is reasonable to assume that as the Persian Gulf settles into a stalemate, food commodities (certainly not oil) may also soften.
Taking advantage of the global wheat market’s anxiety as an opportunity to lock in a measured portion of your 2027 crop production is a good strategy.
High prices can buy more acres. The trick is to sell some wheat while the market is still trying to encourage acres and not waiting until the price succeeds in getting a big crop into the ground.
Steve Kell is a Simcoe County crop farmer and handles grain merchandizing for Kell Grain, with elevators in Belleville and Gilford.
KELL: What’s fuelling wheat price? War and bad weather
If you can’t make a profit a $7 per bushel, consider planting fewer wheat acres
One of the more interesting opportunities for farmers during the late summer of 2026 has been how the market’s anxiety over wheat has produced some really attractive prices to lock in 2027 and 2028’s production.
There are 3 main factors fueling the strength in wheat prices. The first is the concern over the impact that the forecasted super el Nino might have on southern hemisphere wheat production (particularly fear over much lower yields in Australia).
The second is the escalation in the military conflict between Russia and Ukraine, and in particular how the conflict impacts grain shipping out of the Black Sea region to export markets around the world.
Thirdly, the ongoing blockade of shipping into and out of the Persian Gulf, and America’s war with Iran, and how in times of uncertainty, money flows to food and fuel. Oil and other commodities have surged each time the conflict intensifies. All of our crop’s values have risen over the summer due to these factors but wheat has perhaps enjoyed the biggest upside.
As we move closer to planting another winter wheat crop, it is important to at least contemplate opportunities to lock in a profit on a measured portion of the coming year’s production. With bids for next year’s soft red trading in the $8.40s ($310/tonne) delivered to country elevators off the combine next summer, and higher value shipped to end users or stored for delivery in later periods, there has been a lot of interest in marketing 2027 crop wheat.
There is some hesitancy amongst some farmers to book too much 2027 crop when we don’t yet know how much inflation and geo-political uncertainty will impact input costs. But it’s important to recognize that part of the reason that 2027 wheat futures are $0.50 per bushel higher than they are for 2026 crop wheat is because the market realizes that growers are concerned about next year, and that if prices don’t show a return for new crop wheat, the acres might never get planted. If the marketplace believed that farmers were going to plant winter wheat anyway, there would be no reason to show higher prices for next year’s crop.
The real crop budgeting work is specific, calculated farm-by-farm, since each operation has its own yield expectations and its own production costs. But the real decision that needs to be made is that if you can’t pencil out a profit growing wheat when Chicago wheat futures are over $7 per bushel, it might be time to cut back on winter wheat planting. While the commodities markets are certain to fluctuate, as the futures carry erodes into the cash market, achieving a higher price for wheat might be an uphill battle.
It is impossible to predict what geo-political adventures might grab the world’s headlines between now and next summer’s wheat harvest but it is very likely that the world will come to terms with the forces that are pushing prices today. When Russia invaded Ukraine in February of 2022, wheat prices took off like a shot for a few weeks, and then drifted lower as the uncertainty of two of the world’s biggest wheat-exporting nations being at war eased into the realization that a certain amount of commercial trade could still carry on in the midst of the conflict.
While an escalation in those hostilities, particularly in terms of marine traffic safety, have helped to fuel this summer’s wheat rally, experience has taught us that the fund money’s interest in grain futures ebbs and flows as tensions ease. It is reasonable to assume that as the Persian Gulf settles into a stalemate, food commodities (certainly not oil) may also soften.
Taking advantage of the global wheat market’s anxiety as an opportunity to lock in a measured portion of your 2027 crop production is a good strategy.
High prices can buy more acres. The trick is to sell some wheat while the market is still trying to encourage acres and not waiting until the price succeeds in getting a big crop into the ground.
Steve Kell is a Simcoe County crop farmer and handles grain merchandizing for Kell Grain, with elevators in Belleville and Gilford.