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August 24, 2007
(See attached file: PR070824.pdf)(See attached file: PR070824.xls)

  • Another week of blazing export demand combined with pessimistic production news from the EU, Canada and the Southern Hemisphere sparked fireworks in world markets. For the week, CBOT December futures finished up 54 cents/bu, the KCBT was up 34 cents/bu and the MGE rose 26 cents/bu. Corn futures were up 13 cents.
  • With Monday's Egyptian purchase of 180,000 MT, the USDA SRW export forecast of 4.4 MMT is 84% committed - with 9 months of the marketing year still to go. Durum sales are at 77% of the USDA forecast while HRW, HRS and white wheat are all well above 40% committed. This week's export sales report exceeded 1 MMT for the second week in a row. Next week will also be strong based on the Egyptian business, a 110,000 MT of SW sold to an unknown destination and continued strong demand reported by the trade. U.S. exports are currently 90% higher than last year.
  • The International Grains Council pared 7 MMT off its world production forecast, Strat├ęgie Grains estimates the EU harvest will fall 3 MMT (to 127) despite higher planted area, and Statistics Canada pegged production at 21 MMT, down 4 MMT or nearly 20% from last year.
  • The Russian Agriculture Minister reported the government estimate for its wheat harvest at 46 MMT, slightly higher than the USDA forecast, while clearly implying that export limits will be implemented in the near term.
  • The corn/SRW price spread at the CBOT widened 39 cents/bu to $3.83 this week.
  • SRW prices are reported for September delivery, although actual sales in that position would likely be limited to small tonnages due to capacity limitations. The SRW premium to SW increased again, though only slightly, to 22 cents/bu ($8/MT) as continued strong Egyptian business supports SRW while producer selling keeps SW prices in the PNW under pressure.
  • The HRW premium to SRW has fallen to 11 cents/bu ($4/MT) from 32 cents last week. Based on tighter capacity in New Orleans compared to Texas, traders expect some HRW to make it into subsequent Egyptian tenders.
  • Barge and rail rates jumped again this week as heavy rains, caused by remnants of Tropical Storm Erin, led to flooding across the Midwest and Great Plains. Barge rates on the lower Mississippi are now more than double prices paid just two weeks ago. The Minneapolis - Gulf (HRS) route is up 27% ($7/MT) from early August while the shorter SRW hauls on the lower Mississippi are up 121% ($15/MT). The USDA Grain Transportation Report credits increased grain movement among other factors for driving the nearby secondary rail market up more than 10 times, from $9/MT in July to $92/MT this week for spot delivery. Traders reported that rail rates backed off considerably today.

USW Commercial Sales Report:

USDA Grain Transportation Report:

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