NEWS for North Dakotans
Agriculture Communication, North Dakota State University
7 Morrill Hall, Fargo, ND 58105-5665
September 23, 1999
George Flaskerud, Extension Crops Economist
NDSU Extension Service
The loan deficiency payment (LDP) is a major marketing factor this year for producers of most commodities. For that reason, a review of last year's LDP seasonal patterns for various commodities in North Dakota may aid the current decision-making process.
LDP rates were collected from the North Dakota State Farm Service Agency (FSA) for Cass, Ward and Stark Counties. Primarily Thursday/Friday rates were collected for the period Aug. 6, 1998, to Aug. 27, 1999. LDP rates are per bushel except for sunflowers and canola, which are per hundredweight.
Oilseeds had the highest LDP rates during the data period. In Cass, the highest was oil sunflowers at $2.61, followed by canola at $2.44 and soybeans at $1.45. Winter wheat, at 72 cents, was followed by spring wheat at 59 cents, corn at 38 cents and barley at 32 cents. LDP rates varied little among the three counties and were often the same.
Spring wheat LDP rates were the same in Cass and Stark, which were 3 cents higher than in Ward. The highest LDP in Ward during the fall of 1998 was 37 cents on Sept. 10. The LDP dropped to zero by October and remained there, or close to it, until August 1999 when it reached a data period high of 56 cents. (Keep in mind that primarily Thursday/Friday rates only were reviewed.)
Durum did not have an LDP during the data period in Ward. Cass and Stark had a few small LDP rates during September, February and March. Cass and Stark had the same rates, which were 14 cents higher than in Ward, when negative as well as positive LDP rate differences were observed.
Winter wheat LDP rates were 4 cents higher in Stark than in Ward, which were 3 cents higher than in Cass. A fall 1998 peak of 70 cents was reached during early September in Stark. That peak was not surpassed until mid-July 1999 when it reached 79 cents. It was zero during the latter part of October through early December.
Corn LDP rates were the same in Cass and Ward, 1 cent higher than in Stark. In Cass, the highest LDP during the data period was reached in September 1998 at 38 cents. The next highest was 36 cents in July 1999. The LDP was low or non-existent during the February-June period.
Soybean LDP rates were the same in the three counties. The first peak during the data period was reached in early October 1998, at 54 cents. It was nonexistent during most of November and early December. A second peak of $1 was reached in February 1999, a low in April of 64 cents, a third peak in May of $1.01, a low in June of 85 cents and a fourth peak in July of $1.45.
Barley LDP rates were the same in the three counties. The LDP reached a high for the data period of 30 cents in October 1998. By mid-January, it was down to 16 cents. During the balance of the data period, the LDP varied between 11 cents and 16 cents.
Oil sunflower LDP rates were the same in the three counties. The first peak developed in October 1998 at 34 cents. It fell to zero in early November and stayed there until early December. A second peak of 51 cents was reached during late December, followed by a low of 23 cents in January 1999. A third peak of $2.12 was reached in March, which was followed by a low of $1.26 in early April. The next week it bounced to $1.80 before dropping to $1.05 by the end of the month. The highest peak of $2.61 occurred in late July and was followed by a low of $2.10 in mid-August.
Canola LDP rates were higher in Cass during August and early September of 1998 but were then the same as for Ward and Stark during the balance of the data period. A peak of 79 cents developed in early September, which was followed by a low of 4 cents later in the month. A brief rally in October was followed by a period of no LDP until mid-February 1999. Volatility marked the balance of the data period with the following highs: $1.28 in March, 75 cents in April, 70 cents in May, 92 cents in June, $2.32 in July and $2.44 in August.
The LDP pattern for oilseeds may have the greatest potential for significant change this coming year simply because oilseed prices are so much lower than a year ago. In effect, instead of the oilseed LDPs starting the season low and ending high, the opposite could occur. Supply and demand factors will ultimately determine future patterns for the LDPs.
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Source: George Flaskerud (701) 231-7377
Editor: Dean Hulse (701) 231-6136
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