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July 30, 2010

(See attached file: PR 100730.pdf)(See attached file: PR 100730.xls)

Highlights:
  • Further reductions in the Black Sea, EU, and Canadian wheat production outlook, along with rumors that Russia and Ukraine would have to limit wheat exports, continued to drive wheat prices higher this week. A weaker dollar and strong U.S. export sales data also contributed to the substantial rally in the futures markets. CBOT nearbys climbed 34 cents on Friday alone, making it a 65-cent gain for the week and a new 13-month high at $6.61/bu. KCBT and MGEX nearbys were both up 59 cents for the week, closing at $6.74/bu and $6.87/bu, respectively. Spillover from wheat along with strong export sales data sent both soybean and corn prices higher. CBOT soybean nearbys gained 35 cents, closing at $10.52/bu, while corn nearbys were up 21 cents, to $3.92/bu.
  • The International Grains Council (IGC) pegged 2010/11 global wheat production at 651 MMT in their latest report, a 13.0 MMT reduction from their previous estimate. A reduced Russian production outlook of 7.0 MMT accounted for the bulk of the decline, with IGC placing 2010/11 Russian output at 50.0 MMT. The IGC also reduced their production outlook by 3.0 MMT for Kazakhstan (13.5 MMT), 0.5 MMT for Ukraine (18.5 MMT), and 1.5 MMT for Canada (20.5 MMT). IGC expects the U.S. wheat crop to reach 60.0 MMT, an increase of 4.0 MMT from last month’s projection.
  • Russian agricultural analyst SovEcon made further reductions to their 2010/11 total Russian grain production forecast. SovEcon now projects Russian grain output between 70-75 MMT, down from their 77-81 MMT projection made just three weeks ago. The analyst projects 2010/11 Russian wheat exports at 11.0 MMT, down 40 percent from a record 18.2 MMT a year ago.
  • The Ukrainian Customs Service on Wednesday introduced additional quality tests required for wheat exports. The new requirements could slow Ukrainian wheat exports as the country faces reduced output due to ongoing drought conditions.
  • The Canadian Wheat Board (CWB) reduced its 2010/11 production forecast for Western Canada by 0.5 MMT, placing production at 18.5 MMT. Western Canada accounts for approximately 90 percent of Canada’s wheat production.
  • The Wheat Quality Council’s annual hard red spring wheat tour took place this week in North Dakota. Tour participants projected the 2010/11 HRS yield at 46.0 bushels per acre, slightly below last year’s yield of 46.2 bushels per acre. The group projected the durum yield at 38.4 bushels per acre, compared to last year’s 36.2 bushels per acre.
  • A better-than-expected export sales report helped push prices higher on Thursday. According to USDA’s weekly sales report, U.S. commercial sales for the week ending July 22 reached 919,900 MT, which included 95,000 MT of HRW for Egypt. Increases were also reported for Japan (53,980 HRW, 68,481 HRS, 39,177 white), Nigeria (100,000 HRW, 10,000 HRS, 12,000 SRW), the Philippines (80,625 HRS, 25,050 white), Canada (55,000 HRS), and Peru (43,289 HRW, 10,516 SRW).
  • A weaker dollar also contributed to climbing prices this week. The Dollar ICE Index fell to 81.61 on Friday, down from 82.60 a week ago. The dollar has been steadily declining after reaching a peak in early June (88.41) and currently stands at its lowest point since the end of April.
  • The CBOT SRW/corn spread reached $2.69/bu on Friday, which is up from $2.25/bu a week ago. The spread has widened steadily since early June when it stood at 91 cents/bu.
  • Soft white FOB values out of the PNW climbed significantly higher this week due to strong demand. Soft white was at approximately $6.70/bu this week, compared to $5.30/bu last week.
  • The Baltic Panamax Index was higher again this week, closing at 2,632 on Friday. This is up 11 percent from last week.

File Name
PR 100730.pdf
PR 100730.xls
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