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March 23, 2012

(See attached file: PR 120323.pdf) (See attached file: PR 120323.xls)

  • Wheat futures closed lower this week despite late week gains. Futures values dropped sharply the first three days of trading due to good crop weather, a firmer dollar and spillover weakness from the corn and soybean markets. Better than expected commercial sales and a weaker dollar supported prices Thursday and Friday but could not overcome the early week losses. CBOT SRW May contract lost 18 cents on the week to close at $6.54/bu. KCBT lost 11 cents to close at $6.95/bu and MGEX closed at $8.17/bu, a 6 cent loss. The CBOT corn contract fell 27 cents to $6.47/bu and CBOT soybeans closed at $13.66/bu, an 8 cent loss.
  • The spread between the CBOT SRW and CBOT Corn May contracts swung 8 cents this week, closing with SRW at a 7 cent premium to corn. Last week the May corn contract held a one cent premium to the May SRW contract.
  • U.S. commercial sales exceeded trade estimates this week with net sales of 539,300 MT, up 85 percent from the previous week and 16 percent from the prior 4-week average. The better than expected sales report boosted futures prices on Thursday. Total sales for the 2011/12 marketing year, through March 15, 2012 were 25.2 MMT. USDA forecasts 2011/12 U.S. wheat exports (including donations) to reach 27.2 MMT.
  • MGEX HRS contracts gained Friday on concerns that farmers will switch some acreage that is typically seeded with wheat to other crops. A Farm Futures survey showed spring wheat acreage flat, despite a drop last year due to flooding. The survey indicated many North Dakota spring wheat farmers will plant corn or soybeans rather than return to spring wheat this year. USDA will publish its prospective plantings report on March 30.
  • A hard rain across the U.S. crop belt this week gave growing winter wheat a boost and added valuable soil moisture ahead of spring plantings but pressured the futures markets.
  • Russian grain exports could exceed official estimates of 27.0 MMT in 2011/12, according to independent analyst SovEcon Ltd. A return to normal export operations as ports thaw and significant demand from Iran will support export sales, according to SovEcon. Declining wheat prices and significant grain stocks in shallow water ports will also be supportive factors. Last month Russian officials said the country could support up to 27.0 MMT without hurting domestic supplies and avoiding export restrictions.
  • The Baltic Panamax index closed higher this week at 1,036, up from 971 last week. Despite the increase, freight rates mostly fell or stayed the same due to the continued oversupply of vessels forcing owners to make deals at lower rates. Maritime Research’s Grain Freight Index increased from 512.5 last week to 514.0.
  • The ICE Dollar Index closed lower this week at 79.58, down from 79.73 last Friday. The weaker dollar contributed to gains in wheat markets Thursday and Friday.

File Name
PR 120323.pdf
PR 120323.xls
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