With wheat prices in the stratosphere, West River farmers could be forgiven for getting positively giddy about their prospects for profits this year.

But the delirium is being tempered by much higher costs to plant, fertilize and harvest the wheat. And the threat of drought continues to lurk in the background, especially for winter wheat farmers in western South Dakota.

Still, the overall picture for winter wheat farmers is pretty good, and they are expressing their optimism by buying new combines, tractors and other equipment. If prices hold and the farmers get a decent crop, the resulting dollars likely will reverberate through the rest of the South Dakota economy.

Grain prices probably will moderate, but with high demand worldwide, prices likely will remain higher than they have been in the past, according to Marty Beutler, economist at South Dakota State University's West River Ag Center in Rapid City.

"Even with high input prices, if they get a decent crop, people growing small grains should make a decent income this year," Beutler said.

Most wheat farmers haven't reaped a bonanza so far from the record high prices, which reached as high as $13 per bushel this winter. Most of them sold their wheat after last summer's harvest at prices ranging from $5 to $7 a bushel, still considered a very good price.

They simply didn't have wheat left to sell when prices took off late last year, soaring as high as $13 a bushel.

Although those prices have moderated a bit, wheat was still selling at $10.50 per bushel in late March, according to Al May, Extension grain marketing specialist at South Dakota State University in Brookings.

No one knows for sure what the price will be when West River farmers start harvesting winter wheat in July, but the price is being driven by tight worldwide supplies, according to John Rickertsen, research agronomist at the West River Ag Center.

Drought has kept yields down worldwide in recent years, including in the great U.S. wheat garden on the central plains.

Like western South Dakota, other areas in the winter wheat belt, including Texas, western Kansas and Oklahoma, were short of moisture again this year, according to Wall farmer Dale Patterson, who flew from Texas to South Dakota last week.

A smaller crop will tend to hold supplies down and prices up.

But "input" costs of fertilizer, fuel and weed killer have soared, as well.

If wheat prices dropped to last year's levels, farmers would lose money, experts including Rickertsen and May say.

Fertilizer costs have gone up by at least four or five times last year's levels, Patterson said.

He said he knows people who have backed way off on their fertilizing plans.

A year ago, it would have cost $12,000 to $13,000 to put a minimal amount of fertilizer on 1,000 acres of wheat, Patterson said. This year, that minimal amount will cost at least $25,000.

The cost of weed killer for 1,000 acres of wheat would probably total $7,500 to $8,000, Patterson said.

With diesel fuel for tractors and combines running at nearly $4 a gallon delivered, a farmer could easily spend $8,500 for fuel to plant and harvest that crop.

Rent for cropland is running at roughly $25 an acre in western South Dakota.

In short, the record high prices for wheat have become a must, not a luxury, the experts say.

Last year, farmers were happy to get $5 a bushel. If they get that this year, they'll go broke, some experts say.

Buying new tractors

But farmers apparently are optimistic enough to begin replacing equipment.

Even last year, new combine sales were up 15.4 percent nationwide, and sales of 4-wheel-drive tractors were up 22.7 percent, according to The Associated Press.

This year, Grossenburg Implement stores in Winner, Philip and Fort Pierre have sold out of new John Deere combines, tractors, sprayers and air seeders, owner Barry Grossenburg said.

"Both new and used equipment is selling as quickly as we can get it in," Grossenburg said. "We've sold 18 new combines and can't get any more for 2008."

He said new tractors won't be available until late summer or early fall.

Used equipment is selling fast, too, driving his used equipment inventories down by 50 percent, Grossenburg said.

He said the high prices for wheat and other grains are helping all businesses that depend on agriculture. "Everybody in the ag sector is making more money," Grossenburg said.

Of course, implement dealers have suffered along with their farmer and rancher customers for most of the past several years as drought gripped central and western South Dakota.

Drought remains the wild card that has shown up for most of this decade.

Despite the record prices, South Dakota farmers planted 10 percent fewer acres - 1.9 million, for this year's crop - than they did for the 2007 crop, according to the South Dakota office of the National Agricultural Statistics Service.

One reason might be that prices hadn't hit record levels when farmers planted winter wheat last fall, May said.

Another reason is that farmers are reluctant to plant seed in bone-dry ground, which was the case in much of western South Dakota last fall, Rickertsen said.

"Last fall, we never had it so dry," said Rickertsen, who plants test plots of winter wheat for SDSU throughout the region. "Every location I planted winter wheat was dry: Oelrichs, Martin, Hays, Bison, Sturgis, all over," he said.

However, the 2008 acres planted still ties the 1986 total for the fourth-largest number of winter wheat acres ever planted in the state. Over the past 10 years, South Dakota has averaged 1.56 million acres planted.

Rickertsen said the winter wheat is looking OK as it emerges from dormancy this spring, although some of it didn't come up until this spring. That will mean a yield reduction of between 20 percent and 25 percent.

"We've got to get some moisture this spring," Rickertsen said. "These little shots of snow have given us just ten and twenty hundredths. We need inches."

If drought withers the wheat, those record prices won't mean much, Rickertsen said. "You've got to have something to sell."

May agreed. "The critical thing now is we've got to get the bushels. The winter wheat costs are already built in. They've got to get the crop to pay for those," he said.

Patterson said he is being careful about replacing cropping equipment. "We've seen some of this before. We kind of want to wait till the eggs are all hatched."

He said some farmers might spend too much on equipment upgrades and be stuck if drought wipes out the crop.

"If we have a slightly dry year, there's going to be some real wrecks," Patterson said. "A little moisture makes a good farmer out of anybody."

Contact Steve Miller at 394-8417 or steve.miller@rapidcityjournal.com