NEWS for North Dakotans
Agriculture Communication, North Dakota State University
7 Morrill Hall, Fargo, ND 58105-5665
January 27, 2000
George Flaskerud, Extension Crops Economist
NDSU Extension Service
Weather and the USDA's January Supply and Demand Report have been the driving forces behind the price rally that began in December. I would use this rally to make additional sales of inventory and to begin sales of anticipated production.
An oversold condition may have started the rally in December. The USDA report on Jan. 12 helped the rally, especially for corn. Corn stocks were reduced by 280 million bushels, due primarily to increased feed use and exports. Dry conditions in South America and concerns about potential drought in the United States have added fuel to the rally.
Keep in mind that trend yields in 2000 could return prices close to the lows of 1999. Preliminary projections in November for the 2000 crop year by the Food and Agricultural Policy Research Institute (FAPRI) indicate only modest improvements in wheat and corn seasonal average prices and new lows for soybeans.
Exports-to-date (Jan. 13) are not that great for most crops. Soybeans, durum and soft red winter wheat are doing the best. As a percentage of projected, export commitments (actual exports plus unshipped sales) are behind last year and the five-year average for all wheat, slightly greater than last year but behind the five-year average for corn, and greater than last year and about equal to the five-year average for soybeans. Relative to last year, export commitments are up for durum and soft red winter wheat but seriously lagging for hard red spring.
These are reasons for bringing old crop sales up to 90 percent for wheat and corn and 65 percent for soybeans. Use further modest price increases to make additional sales.
For new crop, I would focus on $3.70 to $3.90 in the Minneapolis September spring wheat futures contract for making sales using elevator contracts and put options. Realistic price objectives are $2.50 to $2.70 in the December futures for corn and $5.60 to $5.95 in the November futures for soybeans. Scale up sales to be 65 percent sold at the high end of the ranges. The low end of the price ranges for corn and soybeans assures farm prices at least equal to loan.
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Source: George Flaskerud (701) 231-7377
Editor: Dean Hulse (701) 231-6136