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July 6, 2012


(See attached file: PR 120706.pdf) (See attached file: PR 120706.xls)

Highlights:
  • Wheat futures closed sharply higher this week thanks to weather rallies in corn and soybeans and reduced global wheat production outlooks. Continued high temperatures and drought in much of the U.S. Midwest is threatening corn and soybean crops, providing spillover support to wheat. In addition, several major analyst groups lowered wheat production forecasts this week, indicating the potential for tighter supplies. Large, early week gains more than offset a decline in wheat futures on Friday, spurred by profit taking following four strong closings. The CBOT SRW wheat contract reached a 13-month high on Thursday and closed higher than HRW for the second week in a row. CBOT and KCBT both gained 52 cents on the week to close Friday at $7.91/bu and $7.90/bu, respectively. MGEX gained 50 cents to close at $9.14/bu. CBOT corn increased 71 cents to $7.43/bu and CBOT soybeans finished at $16.20/bu, a $1.07 weekly gain.
  • IGC cut its 2012/13 global wheat production forecast on Monday, as the crop outlook in Russia deteriorated. IGC forecast world production at 665 MMT, down from a previous forecast of 671 MMT and 4 percent lower than 2011/12 production of 695 MMT. IGC cut its forecast for Russian production by 6.0 MMT to 49.0 MMT and lowered its forecast for Ukraine‚Äôs crop by 1.0 MMT to 13.0 MMT. It increased the EU production to 132.1 MMT from 131.2 MMT and US production from 59.0 MMT to 60.5 MMT. IGC forecast 2012/13 world ending stocks at 182 MMT, 17.0 MMT lower than the previous year and a four-year low.
  • On Friday, private analytical firm Informa Economics lowered its 2012/13 U.S. wheat production estimate to 62.2 MMT from its previous estimate of 62.9 MMT. USDA currently estimates U.S. production at 60.8 MMT.
  • The Buenos Aires Grains Exchange on Thursday lowered its 2012/13 planting forecast to 3.7 million (9.25 million acres) hectares, down from the previous estimate of 3.8 million hectares and 20 percent lower than 2011/12. The exchange cited poor prices in the local market for the decline.
  • The German farmers association DBV announced this week that it expects a below-average wheat crop in 2012/13. Farms expect to harvest 2.6 million hectares (6.5 million acres), down 10 percent from the prior year due to frost damage and excessive rain. The farmers originally expected a larger harvest than in 2011/12.
  • FranceAgriMer released its first official projection of the 2012/13 French wheat crop. The farm office expects soft wheat production to rise 6 percent from 2011/12 to 35.9 MMT. An 8 percent increase in expected yield will offset a 2 percent fall in planted area. Regular rain throughout the spring boosted development after severe winter frost damage, but the rain may affect quality.
  • The Baltic Panamax Index closed at 1,157, up from 984 last week. Slightly higher demand, particularly in the Atlantic, supported the index. Maritime Research's Grain Freight Index remained unchanged for the second week at 516.2.
  • The ICE Dollar Index increased sharply this week, closing Friday at 83.56, up from 81.59 last week.

File Name
PR 120706.pdf
PR 120706.xls
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