Market Advisor: Crop Prices For Planning

by George Flaskerud, Crops Economist
NDSU Extension Service

Production and financial planning require that at least tentative decisions be made about what 2001 crops might be worth. Placing a value on the new crop is difficult to do this far in advance. Uncertainty still surrounds the price outlook for grain in the bin, and new crop growing conditions are anybody's guess.

I would plan on 2001 fourth quarter prices in North Dakota to average about $3.20 for spring wheat and terminal durum, $1.75 for corn, $1.50 for feed barley, $2 for malting barley, and $1 for oats. I would value oilseeds at the loan rate. These planning prices are based on supply and demand analysis, futures prices adjusted for basis, and the loan rates.

Preliminary seasonal average farm prices were projected in November for the 2001 marketing year at the U.S. level by the Food and Agricultural Policy Research Institute ( http://www.fapri.missouri.edu/baseline_review.htm ). Based on supply and demand analysis, they projected prices of $2.67 for wheat, $2.02 for corn, $2.12 for barley, $1.19 for oats, and $4.33 for soybeans. Their projections are based on harvested acres increasing 3.4 percent for wheat, decreasing 1.7 percent for corn, increasing 5.8 percent for barley, increasing 4.3 percent for oats, and increasing 1.4 percent for soybeans. They used trend yields in their analysis.

Futures markets suggest a November 2001 price at Hunter, N.D., of about $3.30 for spring wheat, $2 for corn and $4.50 for soybeans. Futures prices as of Dec. 29 and November 2000 basis levels were used for the estimates.

In the December Supply and Demand Report, USDA projected seasonal average farm prices for the current marketing year of $2.50-$2.70 for wheat, $1.65-$2.05 for corn, $2.10-$2.40 for barley, $1.00-$1.10 for oats, and $4.50-$5.10 for soybeans.

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