NEWS for North Dakotans
Agriculture Communication, North Dakota State University
7 Morrill Hall, Fargo, ND 58105-5665
November 2, 2000
George Flaskerud, Extension Crops Economist
NDSU Extension Service
A much improved spring wheat basis was reported in northwest Minnesota during the week of Oct. 23. Basis improvement about offset the drop in spring wheat futures prices that occurred after it rained across parts of the hard red winter wheat area. The stronger basis may spread to areas of North Dakota, creating selling opportunities in the month ahead.
Selling two-thirds of the wheat in the bin may be warranted if the basis improves 15-20 cents and if spring wheat futures price recovers at least half of the 20 cents lost mid-October. Generally, the basis improves during October and November.
The spring wheat basis at Hunter this year has generally been 10-15 cents stronger than a year ago. Last year the monthly average basis improved from a minus 62 cents in September to a minus 35 cents in November. Could the basis improve to a minus 20 or better this year?
At Minot and Gladstone, spring wheat basis levels have been about the same as a year ago. Last year the monthly average basis improved to a minus 50 cents in November at Minot and to a minus 40 at Gladstone.
November, December and April are the months that stand out as potential best months for making wheat sales this year when a combination of factors is examined. These factors include futures price spreads, basis and storage costs. Spreads are the differences in prices between different futures months.
The premium at Minot for good quality milling durum, relative to good quality spring wheat, peaked last year in November. The monthly average premium reached a dollar in November. It dropped to 84 cents in December, drifted down to 55 cents in May and then dropped to 31 cents in July.
Lower quality wheat may have to be held for several more months before discounts are significantly reduced. Last year at Minot, the discount for feed quality spring wheat decreased by 75 cents during December-February.
Source: George Flaskerud, (701) 231-7377
Editor: Tom Jirik, (701) 231-9629