By TIM THORNBERRY
Kentucky Correspondent

LEXINGTON, Ky. — The state’s 2008 banner wheat crop is not likely to repeat in 2009, as futures have plummeted and input costs have risen sharply over the last year.

Last week, University of Kentucky (UK) specialists confirmed the news that planting will be down, as more farmers are opting to save their wheat seeds for next year and go with full-season soybeans in the spring.

“When weighing the commodity price of wheat against the current input costs, many farmers are finding it’s not going to be profitable to grow wheat this year, especially on rented ground,” said UK grain crops specialist Chad Lee. “While fuel prices have dropped, it hasn’t dropped nearly enough to compensate.”

The poor economy isn’t helping. Last summer, wheat futures were at $11 per bushel. This summer the price fell by more than 40 percent to $6. According to commodity reports, at one time the price was below $5.

Another thing helping drive the price down is the huge supply of wheat here and abroad. Cory Walters, UK agricultural economist, said the price decline was caused by several factors, including a significant increase in domestic production, decrease in exports due to high transportation costs, an increase in foreign wheat production and a weak basis.

Wheat production has enjoyed a record year everywhere. According to the USDA, world production for 2008-09 was projected up 3.9 million tons this month to a record 680.2 million, with the largest increases for Canada, the United States, Russia and Ukraine.

In a recent U.S. Wheat Associates (USW) Wheat Letter, USW President Alan Tracy said, “The U.S. Department of Agriculture now estimates that on average, it will cost U.S. producers almost $297 to produce one metric ton of wheat. That means you can buy U.S. wheat today for less than it costs to produce it. That is not a good situation for our producers, nor is it sustainable – but it is a bargain.”

The 2008 Kentucky wheat harvest was one of the largest on record with 460,000 acres, up 200,000 over 2007, and an average of 71 bushels per acre, which was a yield increase of 22 bushels from 2007.

In most cases, Kentucky wheat producers double crop soybeans in the summer. But two years of drought have taken its toll on the double-crop beans, which are more susceptible to moisture stress. Full season beans have done much better and while soybean and corn prices have fallen as well, soybeans should remain more profitable than wheat next year.

“Farmers will be better off to plant full season beans if nothing changes on wheat futures,” said UK agricultural economist Greg Halich. “Given the current market situation, farmers should make about $75 more per acre on next year’s crop by growing full-season beans rather than double cropping wheat and beans.”

The price of fertilizer has been another factor in the increased production costs faced by farmers and though prices have come down slightly of late, they are still higher than last year.

Halich estimates that farmers could pay from $40-$75 more per acre this year, depending on the type of fertilizer they use.

Halich also said that economically, a decrease in wheat production won’t cause a major economic impact here, but he’s not sure how those lower prices will affect the larger wheat producing states such as Kansas and North Dakota.

Kansas is the top wheat producer in the U.S., harvesting about 400 million bushels of wheat a year, with a production value that hovers around $1 billion, according to the Kansas Department of Agriculture.