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January 9, 2009

(See attached file: PR 090109.pdf) (See attached file: PR 090109.xlsx)

Highlights:
  • Wheat futures traded higher this week despite bearish fundamental news. Spillover strength in soybeans, new fund buying, and positioning ahead of Monday‚Äôs USDA reports supported wheat. For the week, nearby CBOT wheat futures finished 13 cents/bu higher, KCBT was up 9 cents/bu and MGEX ended 23 cents/bu higher at $6.80/bushel. Soybeans closed the week up 49 cents/bu while corn finished slightly lower at $4.11/bushel.
  • USDA cut its 2008/09 Argentina wheat production estimate by 1.0 MMT to 9.5 MMT due to lower yields and cut export expectations 28 percent to 4.2 MMT.
  • Commercial sales hit a marketing year low at 41,900, down 90 percent from last week and well below trade estimates of 300,000 to 500,000 metric tons. HRW accounted for most sales with 22,000 MT to Mexico and 22,587 to Israel. Year-to-date sales of 21.8 MMT are 26 percent behind last year but on par with the 5-year average.
  • Dow Jones reported that farmer selling increased significantly early in the week to take advantage of the rally in futures. Daily average receipts at exchange-monitored terminals increased 5-fold for SRW, 30 percent for HRW and 16 percent for HRS. Increased country movement pushed barge freight higher. Feb. St. Louis barge freight traded 400 over tariff, up from 300 on Monday, while Illinois River rates traded 500 over compared with 375 a week earlier.

  • HRS basis retreated this week with low export demand and aggressive Canadian and Australian competition. After trading more than $3.00/bushel over futures for the last few weeks Gulf HRS/14.0 basis eased 80 cents to $2.30/bushel. Increased farmer selling and export business lost to Black Sea and European origins pushed SRW premiums 15 cents/bushel lower to 45 cents/bushel under nearby futures.
  • USDA releases its winter wheat seedings report Monday morning. The trade expects a decline in winter wheat plantings due to lower prices at planting and delayed corn and soybean harvest. The average analyst estimate for all winter wheat plantings was 17.8 million hectares, down from 18.7 million hectares the previous year. Expectations are SRW and winter white plantings will decline 15 and 4.5 percent, respectively, while HRW will be nearly unchanged at 12.6 million hectares.
  • CFTC reported large speculators reduced net-short positions in CBOT wheat by 4,000 contracts to a net short of 16,000 contracts. Index traders increased net long positions by 4,552 contracts to 136,835, accounting for 47 percent of open interest long positions.

File Name
PR 090109.pdf
PR 090109.xlsx
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