NEWS for North Dakotans
Agriculture Communication, North Dakota State University
7 Morrill Hall, Fargo, ND 58105-5665
October 19, 2000
George Flaskerud, Extension Crops Economist
NDSU Extension Service
Market reaction to the Supply and Demand Report released by USDA on Oct. 12 was positive but cautious. Weather and export expectations limited price improvement. A wait-and-see attitude appeared to dominate market action.
The size of the wheat crop was reduced by 63 million bushels and feed use was increased by 25 million bushels. The projected stocks-use ratio was reduced to 37 percent from the September forecast of 41.1 percent. That was enough of a decrease for USDA to raise the seasonal average farm price by 10 cents per bushel.
USDA left exports unchanged despite smaller crops in competing nations. Australia’s wheat crop was reduced by about 73 million bushels and Canada’s by about 18 million bushels. But, world imports were also reduced, by about 48 million bushels, mostly by China.
Hard red spring wheat and durum fundamentals were changed the most. Ending stocks were reduced by about 19 percent for spring wheat and 12 percent for durum.
Dryness in the hard red winter wheat area has the potential to reduce the all-wheat stocks-use ratio to a much lower level. But, this is one area where the market wants to wait and see.
Ending stocks of corn were cut by 440 million bushels from last month’s projection as a result of decreases in carryin and production, and increases in feed use and exports. The projected stocks-use ratio was reduced to about 18 percent from 22.6 percent in September. The seasonal average price was raised by 15 cents per bushel.
Exports of corn were increased to accommodate a very large decrease in world corn production of 583 million bushels. While the U.S. accounted for about 29 percent of that decrease, China accounted for about 67 percent. China’s carryover stocks were considered by USDA as large enough to absorb the shortfall without changes in imports or exports from projections made last month. Imports at the world level were increased by about 64 million bushels.
The projected stocks-use ratio of 18 percent for corn suggests higher corn prices. The key question is: Will the exports materialize? This is also an area where the market is taking a wait-and-see approach. If it looks like the export projection will be achieved, prices will move higher.
Soybean ending stocks were left the same as a month ago. Carryin was increased and production was reduced, as expected by the trade. But, total use was also reduced, which was not expected. USDA did raise the seasonal average price by 15 cents per bushel.
For soybeans, the big unknown is the size of the crop in South America. USDA is projecting a crop that will be 3 percent larger than a year ago. An increase in Brazil is expected because of favorable planting conditions. An increase in Argentina is expected because of a decrease in corn and sunflower acreage.
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Source: George Flaskerud, (701) 231-7377
Editor: Tom Jirik, (701) 231-9629