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August 13, 2010

(See attached file: PR 100813.pdf)(See attached file: PR 100813.xls)

Highlights:
  • Futures traded mixed this week, with CBOT and MGEX prices falling from last week, while KCBT nearbys climbed higher. Prices fell early in the week following U.S. Secretary of Agriculture Tom Vilsack’s statement that wheat production was “robust” and enough to avoid a global wheat shortage. Prices rallied on Thursday, however, following the release of USDA’s supply and demand estimates, which placed global wheat production at 15.3 MMT less than last month. Overall, CBOT nearbys lost 23 cents on the week, closing at $7.02/bu. KCBT nearbys gained 3 cents, to $7.23/bu, while MGEX was down 8 cents, to $7.14/bu, from last week. Corn nearbys gained 6 cents, to $4.11/bu, while soy nearbys lost 7 cents, to $10.52/bu.
  • USDA released their August World Agricultural Supply and Demand Estimates (WASDE) on Thursday. USDA reduced their 2010/11 wheat production forecast by 2.3 percent, placing this year’s global wheat crop at 646 MMT, which is still the third largest crop on record. High temperatures and drought conditions in the Black Sea region were primarily responsible for the reduction. USDA reduced its Russian output projection by 8.0 MMT (45.0 MMT), Ukraine by 3.0 MMT (17.0 MMT), and Kazakhstan by 2.5 MMT (11.5 MMT). The EU projection was also reduced, by 4.0 MMT to 137.5 MMT. USDA increased its U.S. production forecast by 1.3 MMT, to 61.6 MMT, and increased the U.S. export outlook by 5.5 MMT, to 32.7 MMT.
  • French analyst Strategie Grains reduced its 2010/11 EU soft wheat production estimate for the second consecutive month. Strategie Grains pegged EU soft wheat production at 128.2, down 1.3 MMT from last month. The reduction is primarily due to reduced yields in Germany and persistent rains in Bulgaria, Hungary, and Romania.
  • The Ukrainian government is considering a grain export quota due to the drought conditions that have reduced the country’s grain production outlook. The government is expected to announce next week if it will implement the export quota.
  • Gulf and PNW basis prices were higher this week with barge and rail rates increasing towards the end of August and September. Increased export demand also supported prices. Gulf HRW 11.0 basis was up from -.05/bu last week to .35/bu on Friday.
  • Weekly export sales reached their highest point since October 2007, climbing to 1.3 MMT for the week ending August 5. Increases were reported for unknown destinations (353,000 HRW, 10,000 HRS, 20,000 SRW, 31,000 white), Egypt (190,000 HRW), Japan (55,388 HRW, 88,838 HRS, 22,418 white), Yemen (25,000 HRW, 67,000 white), Nigeria (66,000 HRW, 13,580 SRW, 5,713 durum), the Philippines (41,400 HRS, 10,755 white), and Italy (30,500 HRS, 20,000 durum).
  • The Dollar Ice Index was up sharply this week after falling to its lowest point since mid-April last Friday. The index reached 82.95 by week’s end, up from 80.41 a week ago.
  • Freight rates were higher this week with the increase in Chinese demand for iron ore. The Baltic Panamax Index made steady gains throughout the week and ended up gaining 283 points from last Friday, closing at 2,864.

File Name
PR 100813.pdf
PR 100813.xls
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