FARGO, North Dakota — A North Dakota State University ag economist expects more volatility in the spring wheat market in coming weeks based on what he saw in the World Agricultural Supply and Demand Estimates released earlier this week, while the soybean market should stabilize.
Frayne Olson, crop economist/marketing specialist with NDSU Extension, said during NDSU’s monthly Ag Market Situation and Outlook webinar on Thursday, Oct. 14, that he was basing his comments on observations of the stocks-to-use ratios for those crops.
The stocks-to-use ratio for wheat is below 30%, where it typically is more in the neighbor of 35%. While the WASDE estimates from the U.S. Department of Agriculture were generally bullish for wheat, the supply and demand situation makes the wheat market more susceptible to price swings.
“The spring wheat market is getting very sensitive to new information,” Olson said.
Meanwhile, the soybean market, which Olson says has been “jittery” most of the summer, should settle down as stocks-to-use has gone from about 4% up to about 6.5% WASDE increased expected yield for soybeans, which could make this the biggest soybean crop ever.
Based on the new WASDE figures, corn’s stocks-to-use ratio is at about 10% and Olson said that 10% line is kind of the tipping point: If the percentage were smaller, the market could get more volatile; if a larger crop were to push it higher, the market becomes more stable.
Other notes from Thursday’s webinar:
Olson provided updates on news out of China. He said expansion in the hog industry has slowed with higher feed costs and lower pork prices. About half of the soybean crushing plants in northern China have been idled by an energy shortage as the country reduces coal use. China is expecting a near record corn crop but heavy rains in the north have raised concerns about quality.
Tim Petry, livestock marketing economist for NDSU Extension, said a good start to the winter wheat crop in Oklahoma should help demand for beef calves in that part of the country and help keep a floor under prices this fall.
Inflation for September reached a 13-year high at 5.4% and has been driven by a spike in fuel costs. Inflation may slow but “some of these high prices may be here to stay,” said Bryon Parman, an agriculture finance specialist.