Grain Market Gleanings

The backdrop for 2001/02 grain/oilseed price discovery
The backdrop for grain/oilseed price discovery in 2001/02 is framed by slowing global GDP growth, possible delayed China WTO entry, large U.S. free stocks of grain, above trend 2001 South American row crop yields and a substantially improved winter moisture flow (vs. last year) over the central U.S. Some markets discount likelihood of trend or higher ‘01 U.S. yields as evidenced by modest fund shorts in wheat and soybeans. Thus, the stage is set for a bullish surprise if summer weather adversity strikes just as bulls were vulnerable last year to rains which reduced drought fears. Speculative capital will amass quickly if the U.S. food supply is threatened.  Furthermore, end users have far less forward coverage now than last year. Nonetheless, there are ample old crop supplies of grain and oilseeds; thus choppy/lower trade is probable until/unless crop adversity strikes this summer. (Comments by Richard Feltes, vice president and director of commodity research and sr. grain/oilseed analyst at Refco, at the USDA 2001 Ag Outlook Forum held February in Washington, DC.)

The Early 2001/02 Wheat Outlook
Wheat lows are likely to be posted in June, versus September lows last year amid continued shrinkage in U.S. and global wheat stocks in ‘01/02. Post harvest recovery will be limited, however, if 9/01 U.S. corn stocks approach 1.7 bil bu. Note that 7/02 world wheat stocks, on paper, may dip below 100 million tons to the lowest absolute level since 1976.  But 7/02 wheat stocks held by major exporters — at trend ‘01/02 yields — will decline only nominally and still be 22 million metric tons above depressed levels in 95/96 that sparked record high wheat prices. Post harvest price strength will also be contained by slow growth in world wheat stock drawdown driven in part by ample supplies of competitively priced feed grains. Wheat stocks held by China are a major unknown but what is known is that both public and private sector analysts have overestimated Chinese wheat imports over the last 2 years. (Comments by Richard Feltes, vice president and director of commodity research and sr. grain/oilseed analyst at Refco, at the USDA 2001 Ag Outlook Forum held February in Washington, DC.)

Feeding Cattle Method to Market Your Own Grain
Feeding cattle is a method for producers to market their own grain, and capture the added value locally, instead of shipping cattle and finishing them out-of-state. “There seems to be a growing interest in this concept…Producers can do this on their own with retained ownership programs, or in partnership with others. The business options can vary. Lenders have a growing awareness of this enterprise, and some are developing viable cattle feeding loan programs,” says Vern Anderson, an NDSU animal scientist at the Carrington Research Extension Center, who has been involved in the formation of ND Barley Feeders, a new in-state cattle feeding venture.  Anderson also works with the ND Barley Council on feed barley promotion, marketing, and education projects.

More emphasis on feeding and finishing cattle in ND also puts more focus on using one of the state’s principal crops —barley. “Thousands more cattle are and will be fed in this region that weren’t before, both on-farm and in feedlots,” says Anderson. “There is potential for two million more bushels of barley to be utilized in the state over the next year, based on cattle being fed across the state that weren’t fed here before.”

For more information on the ND Barley Feeders, or on feeding barley to livestock, contact Anderson, ph. 701-652-2951 (Carrington office) ph. 701-239-7200 (NDBC office) or by email: vanderso@ndsuextnodak.edu. Publications on feeding barley to livestock are available from the NDBC, and also available on the Internet, at www.ag.ndsu.nodak.edu/farmranch.htm under the livestock production link.

2001 Prospective Planting Outlook Acreage Intentions (1,000 acres); Percent change from last year Crop ND MN SD US Barley 1,600 -16 260 -4 90 -22 5,320 -9 Canola 1,600 +26 135 -4 N/A N/A 1,892 +21 Corn 950 -12 6,800 -4 4,100 -5 76,700 -4 Dry Beans 500 -18 120 -27 11 0 1,453 -17 Spring Wheat 7,100 +4 2,050 +3 1,550 -6 15,500 +2 Durum 2,800 -14 2 0 25 +25 3,460 -12 Winter Wheat 160 +33 20 0 1,300 -4 41,336 -5 All wheat 10,060 -1 2,072 +2 2,875 -5 60,229 -4 Soybean 2,400 +26 7,600 +4 4,700 +7 76,700 +3 Oats 550 -8 375 -6 370 +6 2,204 -5 Oil Sunflower 900 -12 50 -9 600 -14 2,109 -5 Non-Oil Sunflower 300 -6 50 +43 50 +25 623 +9 Sugarbeets 258 0 483 -1 N/A N/A 1,432 -8 All Hay 2,800 +14 2,400 +7 4,200 +4 63,771 +7 Actual plantings may change due to many factors, including availability of credit, grain prices, changing weather conditions, availability of inputs, and the influence of the USDA March 30 Prospective Plantings Report on producer planting decisions. Next USDA planting report is June 29.