GRAIN MARKET GLEANINGS

USDA Economist Points to Positive Price Indicators
While it is too early to predict a substantial recovery in major crop prices in 2001, global stock levels going into the 2001 season are projected to be down sharply from a year earlier. At the end of this season, global grain stocks are projected to be down 13% from a year ago and the lowest since 1995/96. As a result, world prices could move up if weather adversely affects global crop production over the next several months, said Keith Collins, the USDA’s chief economist, in a briefing before the U.S. House of Representatives Committee on Agriculture mid February. Looking ahead to the 2001/02 marketing year, which begins on June 1, Collins pointed to more positive price indicators.  A further decline in winter wheat acreage will likely push total U.S. wheat acreage and wheat production lower. Winter wheat plantings last fall were down 5% from a year earlier and the lowest since 1971. In addition, lack of soil moisture could push winter wheat yields below last year. Reduced wheat supplies in 2001/02 could lead to another year of reduced carryover and improving farm prices.

Seven Facets to Direct Marketing
Thinking about direct marketing what you produce as a food product? You’ll need help and focus in at least seven areas, according to Maribel Fernandez, University of Minnesota Extension Service: 1) Vision and planning; 2) Organization and administration; 3) Production and management; 4) Sales management and customer relations; 5) Advertising and public relations; 6) Financial management; and 7) Regulatory compliance.  Most likely you won’t be able or want to take care of all of these areas on your own, says Fernandez. A list of printed resources on direct marketing is available by contacting Fernandez at maribelf@umn.edu or (763) 682-7394.

U.S. Wheat Acres Lowest in Almost 30 Years
USDA’s initial estimates for the 2001/02 crop predict that U.S. wheat acres will be the lowest since 1972, 1.5 million lower than the current marketing year, according to Jeremy Zwinger, market analyst for U.S.Wheat Associates. Production is expected to decrease by 2.7 million metric tons (MMT) to 57.8 MMT, which would the smallest in the last ten years. U.S. ending stocks are expected to decrease by 3.2 MMT to 19.5 MMT. Plantings for all classes are predicted lower, and the overall crop yield is expected to decrease for the third straight year to 40.5 bu/acre. HRW plantings are predicted down by over 4%, and the late planting time is
expected to reduce yield. Due to this overall reduction in American wheat production, U.S. wheat exports are expected to decrease by 2.0 MMT to 27.9 MMT. Currently, the International Grains Council predicts the 2001 crop at 575.6 MMT, down 4.2 MMT from the previous year, while consumption is expected to increase. At these levels, demand will continue
to outstrip supply leading to a further tightening of stocks.

Cargill Malt Offering Barley Production Contracts
Cargill Malt recently announced that it will buy malting barley directly from farmers at its Spiritwood, ND facility, and offer production contracts for specific malting barley varieties. The programs are designed to complement its existing elevator-origination programs and to encourage improvements in long-term supplies of high quality U.S. malting barley.

The company will also offer growers agronomic support in variety selection, cultivation practices, storage and risk management to help them make cropping choices and manage price risks.

As the only maltster located in the heart of U.S. barley production, our plant in Spiritwood is ideally situated to purchase and receive malting barley direct from producers, thereby improving their economic return,” says Jim Ringo, senior vice president of Cargill Malt. “Offering production contracts will help reduce the risks of planting because contracts with malting companies enable farmers to secure malting barley quality insurance.” Producers interested in learning more about Cargill’s malt barley contract program should call Ray Albrecht at 1-888-280-4046 or contact the company at www.cargillbarley.comon the Internet.

Cargill recently reorganized and consolidated all of its North and South American malting operations and marketing, including Ladish and Schreier, into one entity known as Cargill Malt.

Answers to Your Marketing Questions

“I want to sell my cash soybeans because of the strong basis, but I want to re-own with call options since I believe the futures market will rally. Which option should I purchase?”

“Is there ever going to be a bottom to this soybean market?”

Find the answer to these questions and others in “Betsy’s Bulls N Bears,” on the Small Grains website at www.small grains.org. Send your own questions to Betsy Jensen, Ag Commodity Instructor, Northland Community and Technical College, by email at bjensen@nctc. mnscu. edu

Wilhelmi: Beans Like A Sea Anchor on Crop Prices
While wheat and corn have reason to support market rallies this year, the soybean price has a good chance of dropping even lower. “The only market with a decent chance for recovery is wheat, maybe corn but not beans. I think November beans have a good chance of trading under $4,” said Gary Wilhelmi, a Chicago market analyst and “AgDay” market commentator, who spoke at the Winter Show held recently in Valley City, ND.

Wheat could pick up 10 to 20 cents this spring, supported by strong supply/demand fundamentals. December corn futures could improve to $2.60, if export business picks up. Still, there are inter-market relationships, and with a market that looks to be awash with North and South American bean production, it will be difficult for corn and wheat “to swim against the tide,” said Wilhelmi.

These inter-market relationships have helped support higher livestock prices, in part with cheaper feed. That could change, however. “The cattle market is riding a bubble and could go down $10 anytime,” he said, adding that hog prices have the potential to move lower as well.

Wilhelmi is more optimistic about the general economy now than a year ago, especially with interest rate cuts by the Federal Reserve to head up a recession. He notes his concern about the eventual replacement of Alan Greenspan, the powerful Federal Reserve chairman. Greenspan is 75, and if he dies while still at the helm of the Federal Reserve, it could have a chaotic effect on the markets. There should be a better plan in place to name Greenspan’s successor to help preserve U.S. economic stability, Wilhelmi said.