By George Flaskerud, Crops Economist
North Dakota State University Extension Service

Production for 2006-07 spring wheat and durum crops decreased from a year ago, according to the Supply and Demand Report released by the USDA on July 12. Production also fell below trade expectations. Hot and dry conditions likely will further reduce crop size, especially for spring wheat.

December futures prices for spring wheat have increased about $1.50 per bushel since the beginning of the year, while the increase for December corn futures has been about 40 cents. The price increases may not be over, considering the weather forecast as of July 12.

Recent price strength offers an opportunity to make additional sales of 2006 spring wheat and corn and some 2007 spring wheat.
Spring wheat prices are in the upper part of the historical price range, while corn prices are closer to midrange. Spring wheat prices have exceeded the relatively strong 2002 highs while corn is close.

The USDA crop condition ratings dropped sharply for spring wheat for the week ending July 9. The rating for spring wheat dropped to 42 percent good/excellent from 52 percent the previous week.
Barley and oats also dropped by significant amounts. Corn and soybeans dropped by lesser amounts. Weather forecasts suggest that these ratings will continue to decline.

Ending stocks of all wheat are projected by the USDA to be down 23 percent from a year ago, but up 5 percent from last month to 438 million bushels. However, wheat stocks could be less than 400 million bushels in the August report. The biggest year-to-year reduction in ending stocks came from durum at 45 percent, followed by hard red winter at 37 percent and hard red spring at 24 percent. Further declines are anticipated for spring wheat.

Farmers planted 5 percent more spring wheat acres than March intentions and 4 percent more than a year ago, according to a June 30 USDA acreage report. Durum-planted acres were up 3 percent from intentions, but down 32 percent from a year ago.
Winter wheat-planted acres were up 2 percent from a year ago, but harvested acres were down 8 percent, according to a crop production report also released on July 12.

The spring wheat yield was pegged at 32.9 bushels per acre versus 37.1 last year. In North Dakota, spring wheat was at 30 bushels versus 34 last year. The U.S. durum yield was projected to be 33.1 versus 37.2 last year, while in North Dakota it was 27 versus 35 a year ago. Yields for 2006 were as of July 1.

Domestic use of all wheat was reduced 5 million bushels from last month and 13 million from a year ago. Most of the reduction occurred in hard red winter wheat.

Although all wheat exports were projected to be down 104 million bushels from a year ago (same as last month), soft red winter exports were projected to be up 44 million. White wheat also was up (11 million), but hard red winter was down (125 million), hard red spring was down (16 million) and durum was down (18 million).
Spring wheat exports may be further reduced if production decreases.

The seasonal average farm wheat price was projected to be $3.70 to $4.30 per bushel, up from $3.60 to $4.20 last month. The average was $3.42 last year and $3.40 two years ago.

Worldwide ending stocks of wheat for 2006-07 increased 5 million metric tons (mmt.) from a month ago and are expected to be 12 mmt. below a year ago. The drop largely reflects a decrease in production of 17 mmt. Other changes relative to a year ago include carryover that was down 6 mmt and domestic use that was down about 11 mmt. Ukraine's production was up 2 mmt from a month ago, but was still 30 percent below last year. China's production was up 7.5 mmt from a month ago, which was about the same level as a year ago.

An increase of 1.4 million acres in corn planted was reported compared with last month. However, the increased production was more than offset by lower beginning stocks and increased feed use. The price projection was left the same as last month at $2.25 to $2.65. The price averaged $1.95 to $2 last year.

Soybean-planted acres were down by 2 million from last month.
Carryover was reduced accordingly to 560 million bushels. The seasonal average price decreased slightly to $5 to $6. The average was $5.65 for the 2005 crop.

Barley-planted acres were slightly lower than a month ago. The projected yield was reduced from 64.1 to 63.4 bushels per acre.
Ending stocks were reduced by 7 million bushels. The seasonal average farm price projection remained the same as last month at $2.45 to $2.85. Last year it was $2.53.

Oats ending stocks were about 4 million bushels less than in the June supply and demand report. The average farm price projection remained at $1.60 to $2, compared with $1.63 a year ago.

Dry edible peas gained 87,000 acres in the U.S. and 40,000 in North Dakota for a total of 895,000 in the U.S. and 580,000 in North Dakota. Lentils lost 30,000 acres in the U.S., but stayed the same in North Dakota for a total of 420,000 in the U.S. and 150,000 in North Dakota.