NEWS for North Dakotans
Agriculture Communication, North Dakota State University
7 Morrill Hall, Fargo, ND 58105-5665
December 16, 1999
George Flaskerud, Extension Crops Economist
NDSU Extension Service
Production planning and financial planning require that at least tentative decisions be made about what next year's crops might be worth. Placing a value on next year's crops is difficult to do this far in advance. Next year's weather is anybody's guess.
A reasonable approach to projecting prices is to first build supply and demand tables based on normal weather for the 2000 growing season. Then, derive price estimates for wheat, corn and soybeans in the futures markets at the Chicago Board of Trade and Minneapolis Grain Exchange. From these futures prices, farm-level price estimates can be developed using historical price relationships. Government farm program loan rates would establish a price floor.
The relevant planning price for spring wheat in the fourth quarter of 2000 appears to be about $3.15 per bushel, given the loan deficiency payments that prevailed this fall. I am using a planning price of $3.35 per bushel for milling-quality durum, $2.20 per bushel for malting barley and $13 per hundredweight for non-oil sunflowers. For winter wheat, feedgrains and oilseeds, the loan rate is relevant.
In the December Supply and Demand Report, USDA projected seasonal average farm prices for the current marketing year of $2.45 to $2.55 for wheat, $1.60 to $2.00 for corn, and $4.45 to $4.95 for soybeans. Relative to total use, ending stocks were projected to be 44 percent for wheat, 21 percent for corn and 15 percent for soybeans.
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Source: George Flaskerud (701) 231-7377
Editor: Dean Hulse (701) 231-6136