April 3, 2003

 

Market Advisor: Planting Intentions Surprise Trade

By George Flaskerud, Crops Economist
NDSU Extension Service

Spring wheat, durum and corn planting intentions came in below trade expectations. So did corn stocks. Both reports were released by USDA on March 31.

U.S. farmers intend to plant fewer acres of spring wheat (7 percent), durum (3 percent), soybeans (1 percent), non-oil sunflowers (4 percent), canola (14 percent), edible beans (21 percent), and sugarbeets (2 percent). The trend in North Dakota was similar with the exception of soybeans which was up 12 percent. Another significant difference was that North Dakota farmers intend to reduce spring wheat acres (1 percent) by a much lesser amount than U.S. farmers.

An increase in U.S. planted acres is expected for barley (6 percent) and harvested oats (5 percent). In North Dakota, a 25 percent increase in barley acres is expected while oats acres are expected to remain steady.

Corn acres are expected to remain about the same at the U.S. level but to increase 10 percent in North Dakota. The trade expected a 2 percent reduction in U.S. corn acres, on average.

Corn stocks as of March 1 were 1.3 percent below trade expectations. Wheat stocks were also down (0.4 percent) while soybean stocks were higher (0.7 percent).

Together, the planting intentions report and the stocks report were price-friendly for wheat and especially for corn. The situation for soybeans was just the opposite.

Strong demand may temper the negative impact of the reports for soybeans. Export commitments for soybeans were 99 percent of projected exports as of March 20 versus the five-year average of 86 percent. Unfortunately, weak demand may temper price increases for wheat and corn. Export commitments for wheat and corn were well behind the five-year average.

Weather has the potential to be a major price factor. The U.S. Seasonal Drought Outlook through June as of March 20 shows drought to persist or intensify in most of the spring wheat area and in much of the corn and soybean area. The drought outlook can be found at: www.cpc.ncep.noaa.gov/products/expert_assessment. The U.S. winter wheat condition was rated 51 percent good to excellent as of March 30.

Putting the latest numbers into 2003-04 balance sheets for spring wheat, durum, corn and soybeans show potential tightness in ending stocks relative to total use that is similar to current marketing year balance sheets. Winter wheat stocks could improve although favorable growing conditions will have to prevail.

The bottom line is that prices are likely to be volatile in the months ahead. Marketing plans need to be in place to capture price rallies.

###

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