Wheat Market Overview. July wheat futures have continued the nice rally began before the new year and have traded as high as $2.95 before finding resistance in the congestion area just below the $3.00 level. Seasonal tendencies indicate this rally may be some of the highest prices of the growing season although concerns of dryness in the great plains will keep sellers wary.

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Corn Market Situation. December corn futures prices appear to have found a comfort level in the 10 cent range between $2.45 and $2.55 per bushel. The market is bouyed by strong demand and dryness throughout the corn belt. Market bears take heart from large ending stocks. Seasonal strength should continue into the spring on expectations corn acreage will decline from last year. I look for a test of the contract high of $2.60 and would use that as a pricing opportunity for corn that must be sold off the combine.

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Soybean Market Outlook. New crop November soybean futures have consolidated the recent gains to find a trading range between $5.25 and $5.40 per bushel. Expectations are for a good but not record crop out of South America to begin hitting the market over the next month and increased U.S. acreage. While off take has been strong, I believe that the large supplies will ultimately push soybean prices much lower. Forward pricing the crop combined with an heafty projected Loan Deficiency Payment could allow growers to realize a net price for soybeans near the $6.00 level.

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Dairy Outlook. Milk production in the U.S. increased 3.4% last year. Ideal weather for most of the year and relatively cheap feed pushed up milk per cow 3.4% and milk cow numbers increased slightly, 2,000 head. This was the first time in the 1990's that milk cow numbers increased rather than decreased, and this was the strongest annual increase in milk per cow. Although milk sales were strong during 1999, it could not absorb all of this milk. This is why dairy farmers are now experiencing the lowest milk prices since 1978.
Despite low milk prices, the milk feed price ratio still remains favorable at 3.08. This is because of relatively cheap feed. So producers who buy a lot of feed are not as hurt by these low milk prices as producers who raise most of there feed and have the cost of producing the feed.

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