Fargo, North Dakota
August 17, 2006
By George Flaskerud, Crops
Economist
North
Dakota State University Extension Service
Production estimates were reduced from a month ago by 5 million
bushels for durum and 82 million bushels for soybeans in the
World
agricultural supply and demand estimates
report released by the USDA on Aug. 11. The spring wheat
estimate was reduced by only 2 million bushels, while the
estimate for corn was increased by 236 million bushels. The
spring wheat and corn estimates came in at the high end of trade
expectations, while soybeans came in at the low end. The
estimate for durum was unchanged.
In the near future, a recovery of spring wheat prices to the
highs seen earlier will depend on demand and weather conditions
in the hard red winter wheat growing areas. Demand was not
helped by the USDA's projections that 15 million bushels of
domestic use was transferred from hard red spring to hard red
winter and exports were left unchanged. On the other hand, the
latest drought outlook through October shows that it is expected
to persist or intensify in much of the hard red winter wheat
area.
Durum prices will continue to depend on what happens in Canada,
where dry conditions persist. Forty-one percent of the crop in
Saskatchewan was rated good/excellent as of Aug. 8, according to
Saskatchewan Agriculture and Food, and 42 percent fair. U.S.
durum yields were reduced from 27 bushels to 25 per acre in
North Dakota and from 25 to 17 bushels per acre in Montana. The
decrease in production was offset by a reduction in domestic
use.
The quality of the hard red winter wheat and hard red spring
wheat crops appears to be very good, in general. The protein
content of the hard red winter wheat crop is very high at 13.8
percent as of Aug. 4, compared with 12.2 percent for the 2005
crop average, according to U.S.
Wheat Associates. The high protein will allow millers to get
by with less of the crop than normal because they can stretch
the limited supply through blending with soft red winter wheat.
Early test results indicate a higher than average protein for
the hard red spring wheat crop, too.
Protein premiums are suffering as a result of the higher
protein. A premium was not being offered for 15 percent protein
wheat, relative to 14 percent, in the 20-day-to-arrive bids on
the Minneapolis Grain Exchange as of Aug. 10. The discount for
13 percent protein wheat was 10 cents.
Although all-wheat exports were left unchanged from a month ago,
they will be supported by less competition from the European
Union, where production was cut by 6.75 million metric tons. A
decrease for Argentina was more than offset by increases for
Russia and the Ukraine.
The seasonal average farm wheat price was projected by USDA to
be $3.90 to $4.50 a bushel, up from $3.70 to $4.30 last month.
The average was $3.42 last year and $3.40 two years ago.
The national corn yield was increased from 149 bushels per acre
in the July report to 152.2 in August. Most of the production
increase went to ending stocks, which equal 10.4 percent of
total use versus 9.2 percent last month. The price projection
was reduced by 10 cents across the range to $2.15 to $2.55. The
price averaged $1.99 last year.
The national soybean yield was reduced from 40.7 bushels per
acre to 39.6 bushels, which resulted in the 82 million bushel
production decrease. In addition, the carryover from last year
was reduced by 30 million bushels because of increased crushing
and exports. Minor changes in total use for the 2006 crop
resulted in a significant reduction in ending stocks, which are
estimated to be 15 percent of total use, compared with estimates
of 18.7 percent a month ago. The seasonal average price was left
unchanged at $5 to $6. The average was $5.70 for the 2005 crop.
Production was reduced by 7 million bushels for barley and 3
million for oats. Feed levels were reduced by 5 million bushels
for each, so ending stocks were little changed.
Dry edible bean production was projected to decrease from a year
ago by 4.049 million hundredweight to 23.301 million. North
Dakota's production also was projected to decrease, from 8.588
million to 6.3 million. Acres planted to navy beans increased by
43,000 in the U.S. and 28,000 in North Dakota. On the other
hand, pinto bean planted acres decreased by 145,400 in the U.S.
and 47,000 in North Dakota. Production estimates by class will
be released in December. |