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June 22, 2012


(See attached file: PR 120622.pdf) (See attached file: PR 120622.xls)

Highlights:
  • Wheat futures closed higher this week on all three exchanges. A rally in corn spurred double-digit increases on Monday and Tuesday. Speculation surrounding possible reductions in global production estimates supported futures on Wednesday and Friday. Nearby contracts declined slightly on Thursday due to a soaring U.S. dollar and weaker outside financial markets. MGEX added 72 cents on the week to close at $8.59/bu. CBOT gained 64 cents to $6.73/bu and KCBT closed at $6.86/bu, a 56 cent increase. CBOT corn closed up 12 cents at $5.91/bu and CBOT soybeans added 67 cents to $14.42/bu.
  • Basis levels for HRW, HRS and SRW firmed this week. The large spread between the July and September contracts and minimal farmer selling have provided support for the Gulf HRW basis. In addition, increased domestic feed use of low-protein wheat helped drive HRW basis levels higher. A large sale to China last week and low old-crop supplies drove SRW basis levels higher. MGEX volatility and unpredictable weather spurred firmer HRS basis levels.
  • According to the USDA’s weekly Export Sales Report, U.S. commercial sales of 842,000 MT far exceeded trade estimates of 300,000 to 500,000 MT. Total known outstanding sales for the 2012/13 marketing year, through June 14, 2012 were 6.40 million metric tons (MMT). The strong weekly sales helped limit losses on Thursday.
  • In its weekly crop progress report, USDA increased the percentage of HRW rated good or excellent to 54 percent, compared to 53 percent last week and 36 percent last year at this time. USDA rated 76 percent of HRS as good or excellent, compared to 75 percent last week and 72 percent one year ago.
  • Russia’s top grain analyst SovEcon released its 2012/13 wheat harvest forecast on Tuesday. It expects Russian production to fall in 2012/13 to 50.0 MMT, down from 56.0 MMT in 2011/12 due to winterkill and spring drought conditions. USDA’s most recent estimate put Russian production at 53.0 MMT.
  • On Tuesday, Argentina's Agriculture Ministry authorized the export of 6.0 MMT of 2012/13 wheat. In past years, officials have authorized smaller quantities for export, seeking to guarantee cheap and plentiful supplies in the local market. Growers say that has depressed prices and some have started planting alternative crops. The Ministry on Thursday lowered its forecast for 2012/13 planted area to 3.82 million hectares (9.44 million acres) from 4.0 million hectares last month, citing adverse weather conditions.
  • Germany's leading grain trade company Toepfer International raised its forecast for the country's 2012/13 wheat production to 22.7 MMT from its May estimate of 21.5 MMT. If realized, it would be slightly greater than the 22.7 MMT produced in 2011/12.
  • The Baltic Panamax index closed lower this week at 1,048, down from 1,065 last week. Demand for panamax vessels has been light, which is typical during the northern hemisphere’s summer months. Sufficient coal stocks in China are contributing to the decreased demand. Maritime Research’s Grain Freight Index increased for the first time in six weeks to 424.7, up from 422.9 last week.
  • The ICE Dollar Index closed higher this week at 82.44, up from 81.61 last Friday. The stronger dollar pushed wheat markets lower on Thursday.

File Name
PR 120622.pdf
PR 120622.xls
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