Sowing the Seeds of Self-Reliance for Forty Years
Northern Plains Flood
Nears 500-year Record!
17 April, 1997
by Geri Guidetti
All contents copyright © 1997, Geri Guidetti.  All rights reserved.
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The worsening flood situation in North Dakota and Minnesota, and the maverick hard freezes that have hit the Great Plains this week, have begun to impact the outlook for this year’s wheat supplies. These events may also affect the already low soybean stocks.
Three days ago, the Agriculture Department’s Economic Research Service released its monthly Wheat Outlook. Highlights:

oU.S. 1996/97 export forecast has been revised up 4 percent based on the          pace of sales and shipments

oWorld consumption forecast has been boosted

oGlobal stocks have been reduced

oUSDA Mar. 1 Stocks confirm low total

oU.S. import forecast is revised up 10 million bushels

oUSDA prospective wheat plantings down 9 percent from last year

These revisions are the result of some unexpected news. Wheat exports were up 35 million bushels from last month. The report explains, "With tight supplies in the United States keeping nearby wheat prices relatively high, and no Export Enhancement Program export subsidies, it was expected that the pace of U.S. exports would drop as the season progressed. Exports have slowed, but not as dramatically as expected." More simply stated, they underestimated global demand.

World wheat imports forecast for 1996/97 were also increased this month, by 2 million tons. It seems that Eastern European countries are importing more wheat than was expected because their 1996 harvests were poor. Also boosting imports were Iran, the world’s largest importer, Turkey and the European Union. Foreign wheat consumption forecasts were increased by 5.5 million tons this month, 4 percent higher than a year ago. Iran alone increased its consumption 1.5 million tons. The report goes on to say:

"Some undocumented shipments to neighboring countries may also appear as disappearance in Iran." Disappearance refers to the diminishing grain supplies.
"Increased 1996/97 global consumption has reduced forecast world ending stocks by 3.8 million tons. As a result of the revisions, the global stocks-to-use ratio is now forecast at 18.8 percent, down from 19.1 percent a year ago. Previous forecasts implied increasing world wheat stocks-to-use in 1996/97. However, even though prospective ending stocks were reduced this month for the United States, Canada and Australia, they are still up sharply from a year ago."

The U.S. Import Forecast was boosted 90 million bushels, up 10 million bushels from last month. "About 60 percent of the 10-million-bushel increase is hard spring wheat (excluding durum), with white wheat accounting for the rest. Imports for the season would be one-third higher than last season’s level..." The report goes on to say that they estimated all U.S. wheat stocks at 822 million bushels, "down slightly from a year ago, but still very low by historical standards."

Now to the floods and their probable impact on these numbers. North Dakota has averaged 85 percent of the total planted durum (pasta) wheat acreage in the past two years. It expected to grow 2.6 million acres of durum wheat which was already 13 percent lower than last year’s planting. North Dakota now has 2 million (or more as of this morning’s news) acres of prime wheat land under the waters of the Red River. It is now a certainty that this land will not be ready for the planting of spring wheat the beginning of May. Whether or not there is any planting season left after the waters retreat and the soil dries enough to be cultivated all depends on the river and the weather. Minnesota faces similar prospects.

This morning at 4 A.M., the Red River exceeded its 100-year record high of 39.1 feet; flood stage is 17 feet. It is now expected to crest at new highs again this weekend. No rest for the weary. City of Fargo Operations Manager, Dennis Walaker told Associated Press, "We’re talking records now. We’re approaching our 500-year flood stage. So what you’re seeing here nobody has seen before."
Wall Street wheat futures traders are a nervous lot these days. The deep freeze in the Great Plains this past week – temperatures dropped below 20 degrees in OK, TX and KS—may have destroyed between 70-200 million bushels of hard red winter wheat.

Tragically, these crops were close to the end of their development when they are more susceptible to damage. Wheat in the Northern Plains states were less developed, and time will tell if they were able to recuperate from the hard freeze. According to the Wall Street Journal, " "...analysts are now estimating that 10-15 percent of the premium-grade red winter wheat crop could be lost. The loss in the crop, used in flour and popular with importers, will increase pressure on farmers in Minnesota and North Dakota to plant more wheat." That last sentence certainly gives one pause. Between the record blizzards and recent sub-zero temperatures, not to mention the Red River, the probability of these two states picking up the supply slack appears low, indeed.

This is, thank God, a free country. We are free to buy and sell our products, even farm products, both here and abroad. There are some restrictions based on political issues, agreements, etc., but in recent years, global trade agreements have fostered free trade. The Agriculture Department is especially interested in ensuring that U.S. farmers continue to have access to markets around the world, and works very hard to promote U.S. agricultural products abroad. It does make you wonder, though, where we will draw the line if U.S. supplies continue to decline. Will commodities traders decide to sell at home or continue to market to the world? Will the U.S. continue to become ever more import dependent to meet both its export agreements and its domestic demand for grain? Does make you wonder......Geri Guidetti, The Ark Institute
 
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This article may be reprinted IF my copyright and Sig. File are reprinted intact.
All contents copyright © 1997, Geri Guidetti.  All rights reserved.
Revised: 17 Apr 97




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