October 4, 2001

Market Advisor: Some Crop Prices Should Benefit From Recent USDA Reports

by George Flaskerud, Crops Economist
NDSU Extension Service

Durum, barley, oats and sunflower prices will likely benefit from recent USDA reports while spring wheat, corn and soybean prices will have to look for positive direction from other areas. A Small Grains Summary of Production Report and Grain Stocks Report were released on Sept. 28. The last Crop Production Forecast was released on Sept. 14.

The net effect of the all-wheat production and stock estimates was slightly negative for wheat prices relative to trade expectations. All-wheat stocks were up 22 million bushels more than production was down. December wheat futures in Chicago closed down 3 cents on the day of the USDA reports.

For spring wheat, the net effect was similar. Other spring wheat production was down 7 million bushels relative to trade expectations but stocks of wheat just in North Dakota, excluding durum, were up 24 million relative to a year ago. Trade expectations for other spring wheat stocks were not available. December wheat futures in Minneapolis also closed down 3 cents.

In contrast to the all wheat and spring wheat, both reports were positive for durum prices. Production was down 3 million bushels relative to trade expectations and stocks were down about 29 million bushels from a year ago. Trade expectations for durum stocks were also not available.

Both reports were positive for barley. Production was down 12 million bushels from the last report and down 69 million bushels from a year ago. Barley stocks came in 49 million bushels below a year ago.

Oats production and stocks were down a large 81 million bushels relative to a year ago. As a result, the December oats futures contract closed up 6 cents on report day.

Corn stocks were down slightly while soybean stocks were up slightly relative to trade expectations. For both, harvest pressure was the overriding concern for the market. Futures prices closed lower for both.

Sunflower stocks were down from a year ago, especially for the oil type, which were down 46 percent. Non-oil stocks were down 2 percent. Unfortunately, soybean oil stocks are still at burdensome levels, according to the Supply and Demand Report on Sept 14. Sunflower oil will continue to be at a premium to soybean oil in the months ahead but sunflower prices will be constrained by soybean oil supplies.

The wheat, corn and soybean futures markets were very oversold as of Sept. 28 according to the Relative Strength Index. As a result, a strengthening of prices would be expected in the near future and that strength should be sustained for a period of time since the oversold condition has occurred during corn and soybean harvest.

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