NEWS for North Dakotans
Agriculture Communication, North Dakota State University
7 Morrill Hall, Fargo, ND 58105-5665

June 17, 1999

George Flaskerud, Extension Crops Economist
NDSU Extension Service

The marketing year for wheat is unfolding as a season full of uncertainty. But, this uncertainty has provided somewhat of a marketing opportunity for a portion of the spring wheat and durum crops. Minneapolis September futures have increased about $.25 for spring wheat and $.70 for durum from May lows. Even though prices are still low relative to costs of production, above average yields could result in even lower prices at harvest.

Only 74 percent of the spring wheat and 50 percent of the durum acres in North Dakota were planted as of May 30. For each crop, planting progress was within the range of progress during the five latest springs in North Dakota since 1973, which include 1974, 1975, 1979, 1995 and 1996. During these five late springs, 65 percent of the spring wheat and 53 percent of the durum were planted by May 30, on average. The slowest pace as of May 30 was in 1974 when 52 percent of the spring wheat and 29 percent of the durum were planted.

By June 13 of this year, 94 percent of the spring wheat was planted in North Dakota and 85 percent of the durum. At the U.S. level, 97 percent of the spring wheat was planted, which includes some white spring wheat.

Late planting resulted in below average yields during three of the five years. Yields were the most adversely affected in 1974 when spring wheat was 27 percent below a five-year average and durum was 32 percent below. On average during the five late springs, the spring wheat yield in North Dakota was 9 percent below the moving average and durum was 8 percent below. The 1994-98 average yield in North Dakota was 29.5 bushels per acre for spring wheat and 31.2 for durum.

Weather during the balance of the growing season will be critical to yields, which can still be above average. During 1979, the spring wheat yield in North Dakota was 6 percent above average and durum was 2 percent above.

The average for this analysis was an average of the five years prior to the current year. For example, the moving average for 1995 consisted of an average of the yields for 1990-94, while for 1999 the moving average was an average of the yields for 1994-98.

The balance of the analysis used 1999 U.S. planted acres that were 96 percent of intended for hard red spring wheat and 86 percent for durum. This gave a reduction of planted acres of about 600,000 for each crop from March planting intentions. Harvested acres were calculated as 95 percent of planted for both spring wheat and durum, about equal to the lowest of the percentages for spring wheat during the five late springs.

A 1999 U.S. yield of 30 bushels per harvested acre was used for spring wheat and 32 bushels for durum. The five-year averages were reduced by 4 percent for U.S. spring wheat and 8 percent for durum, except for desert durum, which was not reduced. The reduction for spring wheat at the U.S. level was derived in the same manner as for North Dakota. USDA's winter wheat yield projections as of June 11 were used. A winter wheat yield of 44.7 bushels was projected by USDA versus an average yield of 46.9 in 1998.

Demand numbers for all wheat were based on USDA's projections made on June 11. Demand numbers for the classes of wheat were kept in compliance with USDA's all wheat projections. USDA makes its first class projections in July.

Using my numbers for spring wheat and durum acres and yields, instead of USDA's which were based on planting intentions and normal yields, resulted in ending stocks for all wheat that were about 100 million bushels lower than USDA's. A stocks/use ratio of about .31 was derived versus USDA's projection of about .35.

Current futures prices support the analysis. Chicago December wheat futures have historically averaged about $3.00 during the month of November when the stocks/use ratio is about .31. That contract closed at $2.87 on June 10. Historical analysis suggests about a $.65 premium in Minneapolis spring wheat futures. Minneapolis December closed at a $.65 premium on June 14. A premium is expected in the country for milling quality durum over 14 percent protein spring wheat, but just how much of a premium is heavily dependent on growing conditions. Average historical relationships would suggest a premium of about $.40 in Minot.

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Source: George Flaskerud (701) 231-7377

Editor: Gary Moran (701) 231-7865