NEWS for North Dakotans
Agriculture Communication, North Dakota State University
7 Morrill Hall, Fargo, ND 58105-5665
January 13, 2000
George Flaskerud, Extension Crops Economist
NDSU Extension Service
The all-barley price is expected to bottom out during the current marketing year and gradually improve in the years ahead, according to preliminary Food and Policy Research Institute (FAPRI) projections made in November 1999. FAPRI projected that the average all-barley price will be $1.96 in 1999-00, $1.97 in 2000-01, $1.99 in 2001-02, $2.05 in 2002-03, and $2.11 in 2003-04.
Projected 2000 crop budgets for the north central region of North Dakota use a malting barley price of $2.16 and spring wheat price of $3.02. A feed barley budget was not included, but a government loan price of $1.39 is more than likely relevant for feed barley in Ward County. Yields of 50 bushels per harvested acre for barley and 30 bushels per harvested acre for wheat were used in the budgets.
Under those conditions, returns over variable costs per planted acre would be $19.40 for feed barley, $57.90 for malting barley and $38.75 for spring wheat. Variable costs are those such as fertilizer and chemicals that vary with the level of production and usually vary among crops. Return over variable costs is the amount available to cover land and machinery ownership costs and labor and management.
In the north central region, 54 percent of the barley produced was sold as malting during 1989-1998. The amount varied from 22 percent in 1993 to 85 percent in 1995. If a farmer produces 54 percent malting barley and 46 percent feed barley for the specified prices, then the return over variable costs from the whole barley crop would be $40.19 per acre, versus $38.75 for spring wheat.
FAPRI projected that all-barley acres would increase 9.6 percent in 2000, total supply would increase 9.4 percent and total use would increase 9.8 percent. As a result, the stocks-to-use ratio would decrease a little--from 38.8 percent in 1999-00 to 38.2 percent 2000-01.
The strongest influence on the feed barley price will be the corn price. If corn yields per planted acre dropped to 1993 levels, the lowest in 10 years, Chicago corn futures could strengthen substantially. The corn stocks-to-use ratio could drop to about 8 percent and December futures could average $2.80 in October.
Under that scenario, history suggests that the feed barley price in Minot during October could average around $2.10. The premium for malting barley would depend on the quantity and quality of the barley crop.
Crop budgets will be available from county offices of the NDSU Extension Service.
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Source: George Flaskerud (701) 231-7377
Editor: Dean Hulse (701) 231-6136