April 19, 2001

Market Advisor: Wheat Prices Moving Up

By George Flaskerud, Crops Ecoomist
NDSU Extension Service

Minneapolis December futures may be able to challenge $3.80 this spring, a price not seen since last October. The contract high of $3.89 was set about 10 months ago. The contract price closed at $3.58 on April 16, up from a contract low of $3.40 on April 10. Abandonment and development of the hard red winter wheat crop are key price factors.

USDA’s crop progress report on April 16 indicated that 20 percent of the winter wheat crop was in poor to very poor condition, down from 22 percent last week but up from 14 percent a year ago; 45 percent was in good to very good condition, up from 43 percent last week but down from 62 percent a year ago. The lowest ratings were for states where primarily hard red winter wheat is grown. Crop progress reports can be found at http://www.usda.gov/nass/pubs/staterpt.htm .

Considering the current low wheat price and plentiful moisture situation in the hard red winter wheat area, it is likely that some hard red winter wheat acres will be replanted to feedgrains and oilseeds. It is also possible that the hard red winter wheat yield will be no greater than a year ago. In effect, hard red winter wheat production could be down at least 90 million bushels (9 percent) from a year ago.

The crop progress report also indicated that 4 percent of the spring wheat crop has been planted versus 17 percent a year ago and the five-year average of 9 percent. Warmer and dryer weather is needed for the crop to be planted in a timely manner, although history indicates that yields are not drastically changed by late planting. Weather conditions after planting appear to be more significant, according to North Central Producer Marketing Committee Current Report No. 3 which can be found at http://www.ag.ndsu.nodak.edu/aginfo/cropmkt/cropmkt.htm .

Crop conditions are especially important since most of the world’s excess stocks are held in the United States and world production in 2001 is projected to be down about 1 percent according to the March Grain Market Report by the International Grains Council. Wheat production is projected to be down 5 percent in the European Union, primarily due to wet weather. Combined production by the other major exporters is projected to remain about the same as a year ago. USDA will release its projections for 2001 on May 10.

###

Source: George Flaskerud, (701) 231-7377, gflasker@ndsuext.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu