North Dakota leads nation in No. 1 commodity rankings
Volatility in markets will highlight year
North Dakota farmers for the most part enjoyed good yields last year, coupled with high commodity prices. The yields resulted in the state being the No. 1 producer in 15 different commodity rankings.
North Dakota was the number one producer of hard red spring wheat and durum, making it the No. 1 producer of wheat, excluding winter wheat. The state was number one in barley produced, all sunflower oil and non-oil, canola, flax, dry edible beans including pinto and navy, dry edible peas and lentils and honey production.North Dakota ranked second in the production of sugarbeets and fourth in the production of oats, safflower, and potatoes. Eighth in the production of alfalfa, and ninth in the production of soybeans. It’s easy to see why agriculture is North Dakota’s leading industry.
According to Darren Kadlec, who owns Production Edge Inc. of Pisek volatility will be the common thread with the commodity prices heading into spring planting.
“The recent unrest in the Middle East creates even more volatility in the markets that are volatile to begin with,” he said.
This is the time of year when producers have to start thinking about what they’re going to plant.
North Dakota, which has led the nation in spring wheat production for the last couple of years will again be planted to wheat on a large scale. Just how much, is debatable. Kadlec said the price of wheat has actually fallen about $1.75 per bushel since Feb. 24.
“There’s a good price for 14 percent protein wheat, but it’s scarce and that’s why it is so high,” he said. “The varieties that produce high protein wheat are in short supply.”
The USDA expects 57 million acres of wheat to be planted, up by 3.4 million acres. This accounts for the 47 percent increase in spring wheat acreage which was at a record low in 2010 due to poor planting conditions.
Soybeans have also been paying well per bushel.
“I think the number of soybean acres planted in Walsh County will be up at the expense of dry edible beans,” Kadlec said. “Soybeans can be raised on wetter ground. They are less expensive to raise and harvest easier.”
Currently, Argentina and Brazil are harvesting big soybean crops, which could affect the price, he said.
“There are so many things you can do with soybeans. Soybeans are a basic source of protein worldwide,” he said. “I expect soybean acres to be up, with dry edible bean acres down.”
Kadlec said the soybean market will be interesting to watch.
“The demand for soybeans is huge and growing because it is a basic source of protein not only for humans but also animals,” he said.
China is a big customer of U.S. soybeans, he said and it has a lot of money to buy soybeans.
The USDA is expecting soybean acreage to increase by 600,000 acres and expects harvested acres to be 77.1 million acres. The USDA projects the average annual weighted price to be $13 per bushel.
Kadlec expects corn acreage to continue to inch up in northern areas.
“It’s a great crop for rotation and raises profit potential,” he said. “Corn acres will increase, especially if the current weather pattern holds, which is wet and warm. Corn uses a lot of water.”
The USDA estimates planted corn acreage will be 92 million acres, up 3.8 million. Total supply was put at 14,425 million bushels.
The USDA is estimating feed use and residual to be 5,150 million bushels. That would be down 50 million bushels from last year as animal livestock units are expected to be down.
According to Kadlec,cattle inventories are at 53 year lows, which are directly related to the high prices consumers are paying for meat at the store.
The USDA is projecting 5,000 million bushels of corn for ethanol. Corn exports are expected t grow 50 million bushels in 2011-12 over 2011-11. While world corn production is expected to be a record with the high prices.
Like any other year in agriculture the weather will be the driving factor in prices.
“I’m optimistic that the higher prices will remain. The prospects look good,” Kadlec said. “A lot of it is in the hands of the weather.”
Just how the markets are going to react long-term or throughout the upcoming growing season is hard to determine.
According to Kadlec, there is a lot of volatility in the market right now. Besides the unrest in the Middle East there is the Japan disaster also.