Grain Market Gleanings

Winter Wheat Planted Acres Lowest Since 1971
Winter wheat seeded area for 2002 is expected to total 41 million acres, down fractionally from 2001, according to a January report by USDA. This is the smallest area since 1971. Acreage increases in Texas, Oklahoma, and Montana more than offset an acreage decline in Kansas. This is the first time since 1990 that wheat acreage has increased in Oklahoma, while acreage continues to decline in Kansas, where seedings have not increased since 1996, and is currently at the lowest level since 1957. Winter wheat acreage in Minnesota was estimated at 25,000 acres, up from 15,000 acres the previous year.   Winter wheat acreage in North Dakota is 80,000 acres, down from 150,000 acres in 2001. Winter wheat acreage in South Dakota is 1.150 million acres, down from 1.3 million acres in 2001.

Grain Seller Beware
Selling grain is tough enough the way it is, without worrying whether the buyer is going to pay you or not. But on rare occasions, it can happen.

Even if a buyer is licensed and bonded, there is still no guarantee that farmers will be fully reimbursed if a buyer becomes insolvent. If the buyer does not have enough grain and bond assets available to satisfy all valid grain claims, available funds are distributed on a prorated basis.

If you sell your grain and haven’t been paid in 30 days, make some calls and start checking around. Become familiar with the reputation of grain buyers. If you haven’t done business with a buyer before, consider easing into the business relationship. Ask for a cash payment at the time of delivery.  Or, before receiving payment, sell/deliver only a small amount, instead of selling a large amount or making many deliveries.

Bear in mind too that delayed price and deferred payment contracts are examples of credit-sale contracts, which in most cases, do not have bond protection.  N.D. state law defines credit-sale contracts as written grain sale contracts that provide that the sale price may be paid more than 30 days after the delivery or release of the grain.

The title to grain passes from the farmer to the buyer when the contract is signed. At this point, the farmer becomes an unsecured creditor. Farmers must be aware of the fact that credit-sale contracts are not typically protected by the buyer’s bond. Language concerning the lack of bond coverage or coverage limitations must be printed in bold type immediately above the signature block on the contract. If no bond coverage is available, the contract will read something like this: “This contract is not protected by bond coverage in the event of the buyer’s insolvency.” The warning means exactly what it says.

The ND Public Service Commission offers more tips—including advice on handling storage and grading disputes—in its brochure “Selling Grain? Know Your Rights and Your Responsibilities.” It may be found online at www.psc.state.nd.us/licenseframe.htm. The ND PSC also includes a list of licensed warehouse or grain buyers online. Or call (701) 328-4097.

Wheat, Corn Export Commitments Lagging Behind Soybeans
As of mid-January (January 17), wheat grain export commitments (shipments to date plus undelivered sales) were 781 million bushels, 50 million bushels less than the same time last year, according to William Tierney, Kansas State University extension ag economist. This figure includes an estimate of wheat that has either been shipped or been tendered for by the Commodity Credit Corporation as Food Aid Initiative (FAI) donations. It does not include FAI or other donations that have been announced but not yet tendered for by the CCC.

On average, 82% of total annual wheat grain exports are contracted by this date. Grain exports account for about 97% of total wheat exports; the other 3% is wheat products (i.e., flour, bulgur, etc.). Using the USDA’s January projection of total wheat exports of 1 billion bushels, it’s estimated that wheat grain exports would be 960 million bushels.  Therefore, the ratio of 2001/02 export grain commitments (plus food aid tenders to-date)/total annual grain exports is 81%. Based on a seasonal of export commitments-to-total-annual-exports, wheat export commitments on average should be about 791 million bushels as of January 17.  Presently, the pace of export sales are “on schedule” to meet the USDA’s latest projections. There may, however, be some further reallocation of those exports among the various classes of wheat. 

This year’s wheat commitments are the fourth lowest figure for this date on record. The smallest commitments (for this date) occurred in 1985, when export commitments were only 680 million bushels. Since 1975 (the earliest date for which mid-January export commitment data is available), the average for wheat grain export commitments as of January 17 is 988 million bushels.

On average, 58% of corn exports are booked as of mid-January (based on data from 1976-2001). This year, export commitments of corn were 925 million bushels, 41 million bushels less than last year. The 25-year average for corn export commitments as of January 17 is 1,082 million bushels. This year’s figure implies that just 47% of the USDA’s projected 2,050 million bushels had been booked by January 17.

Export commitments of soybeans as of January 17 were 831 million bushels, above last year’s figure of 723 million bushels and a record for the last 25 years. The average for this date is 512 million bushels. Using figures as of January 17, soybean commitments thus far indicate that 82% of projected annual exports had been booked. On average, the ratio of mid-January commitments/annual exports is 67%.